In the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced significant changes to India’s income tax structure, aiming to enhance the spending power of the middle class and stimulate economic growth. The budget raises the nil tax slab threshold to ₹12 lakh annually, meaning individuals earning up to this amount will not be liable for income tax.
This adjustment is expected to increase disposable income, thereby boosting consumer demand across various sectors. The revised tax slabs and rates have been recalibrated to provide relief to taxpayers and encourage private investment. This article provides a detailed breakdown of the current income tax slabs as outlined in the Budget 2025-26.
What is income tax?
Under income tax laws in India, individuals, Hindu Undivided Families (HUFs), companies, partnership firms and co-operative societies, etc., have to pay a tax on their income once in a year. However, the income tax slab for each category is different. Even within a category, income tax slabs could be different for one entity when compared to the other based on some factors. In this article, we would discuss the various income tax slabs applicable on individual taxpayers in India.
See also: Know more about taxation of cooperative housing society
What is income tax slab?
The rate at which an individual’s income is taxed in India is known as his income tax slab. Income tax slabs are different for individual taxpayers depending on two factor:
Income: The higher the income, the higher the tax slab
Age: The higher the age, the lower the tax slab (only applicable under the old tax regime).
See also: How to save capital gain tax on sale of residential property
New tax regime: 115BAC of Income Tax Act
The government, from April 1, 2020 (FY 2020-21), introduced a new tax regime. To enforce this, Section 115BAC was inserted in the Income Tax Act, 1961. The new income tax regime has been made the default tax regime in the Budget 2023-24. However, citizens will continue to have the option to avail the benefit of the old tax regime, said finance minister Nirmala Sitharaman. Also, the Budget 2023-24 has increased the rebate limit in the new tax regime to Rs 7 lakh.
see also about: 80ggc of income tax act
Budget 2025: Tax slab under new tax regime
| Income range (Rs.) | Tax rate |
| 0 – 4 lakh | Nil |
| 4 – 8 lakh | 5% |
| 8 – 12 lakh | 10% |
| 12 – 16 lakh | 15% |
| 16 – 20 lakh | 20% |
| 20 – 24 lakh | 25% |
| Above 24 lakh | 30% |
Additionally, taxpayers with an annual income of up to ₹12 lakh will not have to pay any tax due to the enhanced rebate under Section 87A. For salaried individuals, the standard deduction has been increased to ₹75,000, making incomes up to ₹12.75 lakh effectively tax-free.
Tax slab under new regime before Budget 2025-26
| Income | New tax regime slab |
| Up to Rs 3 lakh | Nil |
| From Rs 3 lakh to Rs 7 lakh | 5% |
| From Rs 7 lakh to Rs 10 lakh | 10% |
| From Rs 10 lakh to Rs 12 lakh | 15% |
| From Rs 12 lakh to Rs 15 lakh | 20% |
| Above Rs 15 lakh | 30% |
| Source: Budget 2024-25 |
New tax regime surcharge
10% of income tax if total income is over Rs 50 lakh.
15% of income tax if total income is over Rs1 crore
25% of income tax if total income is over Rs 2 crore
37% of income tax if total income over Rs 5 crore
In the Budget 2023-24, the highest surcharge rate has been reduced from 37% to 25% in the new tax regime. This to further result in reduction of the maximum personal income tax rate to 39%.
New tax regime: Key features
Tax slabs in new income tax regime
Contrary to the old regime which has only four tax slabs, there used to be 7 tax slabs in the new tax regime. The Budget 2023-24 has reduced it to 6.
New tax regime means taxpayers have to forgo exemptions/deductions
Meant to simplify the tax calculations, opting for the new tax regime means the taxpayer will have to let go of a total of 70 deductions and exemptions offered under various sections of the Income Tax Act.
These include:
- Standard deduction of Rs 50,000 currently available to salaried taxpayers.
- Deduction for specified investments or expenses under Chapter VI-A (like Section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, Section 80EE, Section 80EEA, 80EEB, 80G, Section 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc. Section 80C deductions include commonly used investments mediums like contributions provident fund contributions, life insurance premium, ELSS, NPS, PPF, school tuition fee for children, etc.)
- Leave travel allowance (LTA) available to salaried employees, twice in a block of four years.
- House rent allowance (HRA).
- Interest on housing loan.
- Children education allowance.
- Deduction of Rs 15,000 allowed from family pension under Clause (iia) of Section 57.
- Deduction for professional tax.
Rebate under Section 87A is available under new tax regime
While those opting for the new tax regime have to forgo several tax exemptions, they are offered the deduction under Section 87A. You can claim a maximum rebate of up to Rs 2,500 under Section 87A. The applicability of Section 87A means someone earning an income of Rs 5 lakhs will have to pay no income tax. Here is how:
Total income: Rs 5 lakhs
Income tax liability
Up to Rs 2.50 lakhs: Nil
From Rs 2.50 lakhs to Rs 5 lakhs: 5% = Rs 12,500
Deduction offered under Section 87A: Rs 12,500
Total tax liability: Nil
However, this benefit is available only to resident Indians and not NRIs.
New tax regime is optional
While the new tax regime is the default tax regime, an individual taxpayer has the freedom to continue paying his income tax based on the old tax regime (about which we would talk in the subsequent parts of this article), if he so wishes. FY 2020-21 was the first time when individual taxpayers got to choose between the old tax regime and the new tax regime while filing their income tax returns.
Sticking with new tax regime is not mandatory even if you switched to it once
One can opt for switching to the new tax regime on a year-to-year basis.
No different treatment to senior citizens, super senior citizens under new tax regime
Tax slabs under the new tax regime are based only keeping in view an individual’s income and not their age. So even if you are over 60 years of age and earn over Rs 15 lakhs as your income, you will have to pay 30% income tax. The same remains true if you are over 80 years of age and fall under the category of super senior citizen. You will pay the same rate of tax as someone in the age of 20 or 30 years.
The same logic applies in case of basic exemption limit – an income of Rs 2.50 lakhs remains the basic exemption limit for those opting for new tax regime, irrespective of their age.
Old income tax slab
The old tax regime, which continues to exist parallel with the new tax regime, offers only 4 slabs under which an individual’s income is taxed. Unlike the new tax regime, the old tax regime enables the taxpayer to enjoy deductions and exemptions on their tax liability under various sections of the income tax law.
Old income tax slabs for individual aged below 60 years and HUF
| Income | Old tax regime slab rate |
| Up to Rs 2.50 lakhs | Nil |
| From Rs 2.50 lakhs to Rs 5 lakhs | 5% |
| From Rs 5 lakhs to Rs 7.50 lakhs | 20% |
| From Rs 7.5 lakhs to Rs 10 lakhs | 20% |
| From Rs 10 lakhs to Rs 12.50 lakhs | 30% |
| From Rs 12.50 lakhs to Rs 15 lakhs | 30% |
| Above Rs 15 lakhs | 30% |
Old income tax slabs for individual aged between 60-80 years
| Income | Old tax regime slab rate |
| Up to Rs 3 lakhs | Nil |
| From Rs 3 lakhs to Rs 5 lakhs | 5% |
| From Rs 5 lakhs to Rs 10 lakhs | 20% |
| Over Rs 10 lakhs | 30% |
Old income tax slabs for individual aged over 80 years
| Income | Old tax regime slab rate |
| Up to Rs 5 lakhs | Nil |
| From Rs 5 lakhs to Rs 10 lakhs | 20% |
| Above Rs 10 lakhs | 30% |
New tax regime vs old tax regime
New Tax Regime vs Old Tax Regime (Budget 2025-26)
| Income (₹) | Old Tax Regime (Age ≤ 60 years) | Old Tax Regime (Age 60-80 years) | Old Tax Regime (Age > 80 years) | New Tax Regime (All Age Groups) |
|---|---|---|---|---|
| Up to ₹2.5 lakh | NIL | NIL | NIL | NIL |
| ₹2.5 lakh – ₹3 lakh | 5% | NIL | NIL | NIL |
| ₹3 lakh – ₹4 lakh | 5% | 5% | NIL | NIL |
| ₹4 lakh – ₹5 lakh | 5% | 5% | 5% | 5% |
| ₹5 lakh – ₹8 lakh | 20% | 20% | 20% | 5% |
| ₹8 lakh – ₹12 lakh | 20% | 20% | 20% | 10% |
| ₹12 lakh – ₹16 lakh | 30% | 30% | 30% | 15% |
| ₹16 lakh – ₹20 lakh | 30% | 30% | 30% | 20% |
| ₹20 lakh – ₹24 lakh | 30% | 30% | 30% | 25% |
| Above ₹24 lakh | 30% | 30% | 30% | 30% |
Key Updates:
- Higher Nil Tax Threshold: Under the new tax regime, income up to ₹4 lakh is tax-free, significantly higher than the old regime’s ₹2.5 lakh (or ₹3 lakh/₹5 lakh for senior/super senior citizens).
- Simplified Tax Rates: The new regime applies uniform slabs for all age groups, removing age-based exemptions available in the old regime.
- Enhanced Rebate: Individuals earning up to ₹12 lakh effectively pay zero tax after rebates and deductions in the new regime.
Examples can further understand this.
Old vs new tax regime? Which one is better
Example 1: High-Income Salaried Individual
Kunal Munshi has an annual income of ₹15 lakhs and claims deductions under Sections 80C and 24.
| Particulars | Old Tax Regime | New Tax Regime (Budget 2025-26) |
| Annual Income | ₹15,00,000 | ₹15,00,000 |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Deduction under Section 80C | ₹1,50,000 | Not Applicable |
| Deduction under Section 24 | ₹2,00,000 | Not Applicable |
| Taxable Income | ₹11,00,000 | ₹14,25,000 |
Tax Calculation:
- Old Regime:
- Up to ₹2.5 lakh: NIL
- ₹2.5 – ₹5 lakh @ 5%: ₹12,500
- ₹5 – ₹10 lakh @ 20%: ₹1,00,000
- ₹10 – ₹11 lakh @ 30%: ₹30,000
- Total Tax: ₹1,42,500
- New Regime:
- Up to ₹4 lakh: NIL
- ₹4 – ₹8 lakh @ 5%: ₹20,000
- ₹8 – ₹12 lakh @ 10%: ₹40,000
- ₹12 – ₹14.25 lakh @ 15%: ₹33,750
- Total Tax: ₹93,750
Conclusion: Kunal benefits more from the new tax regime, saving around ₹48,750 compared to the old regime.
See also: Know all about wife share in husband property after death
Example 2: Middle-Income Salaried Individual
Vimal Kumar earns ₹8 lakhs annually and invests ₹1.5 lakh under Section 80C.
| Particulars | Old Tax Regime | New Tax Regime (Budget 2025-26) |
| Annual Income | ₹8,00,000 | ₹8,00,000 |
| Standard Deduction | ₹50,000 | ₹75,000 |
| Deduction under Section 80C | ₹1,50,000 | Not Applicable |
| Taxable Income | ₹6,00,000 | ₹7,25,000 |
Tax Calculation:
- Old Regime:
- Up to ₹2.5 lakh: NIL
- ₹2.5 – ₹5 lakh @ 5%: ₹12,500
- ₹5 – ₹6 lakh @ 20%: ₹20,000
- Total Tax: ₹32,500
- New Regime:
- Up to ₹4 lakh: NIL
- ₹4 – ₹7.25 lakh @ 5%: ₹16,250
- Total Tax: ₹16,250
Conclusion: Vimal saves ₹16,250 under the new tax regime, making it the better option for him.
Income tax slab: Rates for FY 20-21
Under new tax regime
| Income slab | Tax rate |
| 0 to rS 2.50 lakh | None |
| Rs 2.50 lakh to Rs 3 lakh
Rs 2.50 lakh to Rs 5 lakh* |
5% (rebate under 87A is applied) |
| Rs 5 lakh to Rs 7.5 lakh | 10% |
| Rs 7.5 lakh to Rs 10 lakh | 15% |
| Rs 10 lakh to Rs 12.5 lakh | 20% |
| Rs 12.5 lakh to Rs 15 lakh | 25% |
| More than Rs 15 lakh | 30% |
*For senior citizens
Income tax slab rates for FY 2019-20
For individual (less than 60 years) and HUFs
| Income slab | Income tax rate |
| Up to Rs 2.50 lakh | None |
| Rs 2.50 to Rs 5 lakh | 5% |
| Rs 5 lakh to Rs 10 lakh | 20% |
| Above Rs 10 lakh | 30% |
Income tax slab rates for FY 2018-19
For individual (less than 60 years) and HUFs
| Income slab | Income tax rate |
| Up to Rs 2.50 lakh | None |
| Rs 2.50 to Rs 5 lakh | 5% |
| Rs 5 lakh to Rs 10 lakh | 20% |
| Above Rs 10 lakh | 30% |
Income tax slab rates for FY 2017-18
For individual (less than 60 years) and HUFs
| Income slab | Income tax rate |
| Up to Rs 2.50 lakh | None |
| Rs 2.50 to Rs 5 lakh | 5% |
| Rs 5 lakh to Rs 10 lakh | 20% |
| Above Rs 10 lakh | 30% |
FAQs
How much income is tax free in India?
For individuals, income of up to Rs 2.5 lakhs is tax-free, if they are below the age of 60. In case of people aged between 60 and 80, income of up to Rs 3 lakhs is tax-free. For individuals aged over 80 years, income of up to Rs 5 lakhs is tax-free.
What period in a year is taken into account to calculate income tax in India?
In India, income tax is levied on the annual income of a person. To impose this tax, a financial year is taken into account. A financial year in India starts on April 1 in one calendar year and ends on March 31 in the next calendar year.
Is it a must to opt for new tax regime to file income tax returns for AY 2021–22?
No, the new tax regime is optional. One may choose to opt for it or stick with the old tax regime.
What is the due date for filing income tax returns for individual taxpayers?
The due date for filing income tax returns for individual taxpayers is July 31 of the assessment year.
How does age impact income tax liability?
Under income tax laws in India, there are three age-based tax slabs. 1. For people aged below 60 2. For people between 60 and 80 years of age, known as senior citizens 3. For people above 80 years of age, known as super senior citizens Note that tax slab for partnership firms and LLPs, companies, local authorities and co-operative societies are different, too.
How many types of individual taxpayers are there?
Under Indian income tax laws, individual taxpayers are put into the following three categories based on their age: Individuals (aged less than of 60 years), including residents and non-residents Resident senior citizens (60-80 years of age) Resident super senior citizens (aged over 80 years)
