Income Tax Slabs for FY 2025-26/ AY 2026-27 in India

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The latest amendments aim to provide relief to middle-income groups while ensuring progressive taxation. If you are opting for the old or new tax regime, understanding the revised income tax slab structure is important for effective financial planning in FY 2025-26/ AY 2026-27. In this blog, we shall explore the latest tax slabs, deductions, and key changes introduced in the budget to help you make informed tax decisions.

What is an Income Tax Slab?

An individual’s tax liability in India is determined based on their annual income and falls under different income tax slabs. The government has structured these slabs to ensure a progressive tax system, where the tax rate increases as income grows. Keeping up with these tax slabs in India is necessary, as they are frequently revised in the annual Union Budget.

For FY 2025-26, the new regime tax slab and old tax regime slabs continue to coexist, allowing taxpayers to choose the system best suited to their financial situation. The categorization of taxpayers remains based on age, including:

• Individuals below 60 years
• Senior citizens (60 to 80 years)
• Super senior citizens (above 80 years)

Income Tax Slabs under New Tax Regime FY 2025-26

The Union Budget 2025 has introduced modifications in the tax slab for FY 2025-26, ensuring relief for lower and middle-income earners. If you are considering the new tax slab 2025 or sticking to the old tax regime slabs, staying informed about the latest tax updates ensures better compliance and savings.

What Changed Under the New Tax Regime Budget 2025?

Budget 2025 introduced notable changes to the new regime tax slab. One of the key adjustments was the increase in the basic exemption limit, providing greater relief to taxpayers. Here’s a comparison of tax rates before and after Budget 2025:

The revisions in the tax slab for FY 2025-26 aim to offer greater tax benefits to individuals, particularly those in the middle-income category. With these updates in the income tax slab for FY 2025-26, taxpayers can now enjoy an increased exemption limit, leading to potential savings in their annual tax outgo.

Income Tax Slab for FY 2025-26 for Individuals Below 60 Years

Taxpayers below 60 years have the option to choose between the old tax regime slabs and the new regime tax slab. The income tax slab for FY 2025-26 under both regimes is outlined below:

Income Tax Slab for Senior Citizens (60 to 80 Years)

Senior citizens aged 60 to 80 years have a slightly higher exemption limit under the old tax regime, whereas the new regime remains the same.

Income Tax Slabs for Super Senior Citizens (Above 80 Years)

Super senior citizens receive a higher basic exemption limit under the old regime. The new regime remains uniform for all individuals.

Revised Income Tax Slab for FY 2025-26 (AY 2026-27) - For New Regime

As the new financial year begins, taxpayers must stay informed about the revised income tax slab for FY 2025-26 to ensure accurate tax filing. Here’s the updated new tax slab 2025:

Income Tax Slabs for Resident Individual or HUF Under New Tax Regime

For resident individuals and Hindu Undivided Families (HUFs) opting for the new tax regime, the updated slabs for FY 2025-26 are as follows:

Income Tax Slabs for Non-Resident Individuals under New Tax Regime

Non-resident individuals are subject to a different taxation framework. Tax slabs that are applied to the income earned by individuals less than 60 years of age are relevant for this category of taxpayers. Here are the updated tax slabs under the new tax regime for FY 2025-26:

Deductions and Exemptions under New Tax Regime

The new tax regime, introduced to simplify taxation and increase compliance, comes with a trade-off: many of the exemptions and income tax deductions available in the old regime are no longer applicable.

While the old tax regime allowed for nearly 70 different deductions and exemptions, the new tax regime limits these significantly to ensure a straightforward tax calculation.

Below are the deductions that remain available and those that are no longer permitted under the new tax regime for FY 2025-26:

Deductions that are Allowed

• Traveling allowance in the case of transfer or for employment
• Deduction under Section 80JJAA for new employees (employment)
• Investments in the National Pension Scheme (Section 80CCD(2))
• Any conveyance allowance due to work travel
• Transport allowance for specially-abled individuals

Deductions that are Not Allowed

• Housing Loan interest under Section 24
• Professional tax
• Special allowances under Section 10(14)
• Children education allowance
• Helper allowance
• Relocation allowance
• Conveyance allowance
• House Rent Allowance
• Leave Travel Allowance

Comparison of Tax Rates Under New Tax Regime & Old Tax Regime

Exploring old vs new tax regime is important for optimizing tax savings. Below is a comparison of tax rates under both regimes for FY 2025-26:

Which is Better, the New Regime or the Old Regime?

The income tax system in India plays a significant role in the country’s economic framework. It is formulated to collect revenue for the government while ensuring a fair distribution of the tax burden. With the initiation of the new tax regime, taxpayers now have the flexibility to choose between the old and new systems based on their financial circumstances.

Old Regime

Under the old regime, taxpayers benefit from a progressive tax structure with various deductions and exemptions. These include benefits under Section 80C, HRA, LTA, and standard deductions, which help in reducing taxable income. However, the tax rates in this regime are relatively higher, making it beneficial primarily for individuals who can claim multiple deductions.

New Regime

The new tax regime offers lower tax rates with simplified compliance. It eliminates most deductions and exemptions, allowing for a straightforward tax calculation process. The recent changes in Budget 2025 have slightly modified the tax slabs, providing additional relief for lower and middle-income earners. This regime is suitable for those who prefer a hassle-free tax filing process without the need to track various exemptions.

The decision between the two regimes depends on individual financial considerations. Taxpayers must assess their income, eligible deductions, and long-term financial goals before selecting the appropriate tax regime. Consulting a tax professional can guide you in making an informed choice with regards to your personal financial planning needs.