The finance minister of India, Nirmala Sitharaman has announced the changes in the New Income Tax Slabs under new tax regime in Budget 2025. This budget contained significant initiatives across multiple sectors, aiming to promote economic growth, support agriculture, enhance infrastructure, and introduce various reforms. Keep reading the article to have a clear understanding about the New Income Tax Slab Rates.
New Income Tax Slab
The income tax is a direct tax that follows a progressive slab system, where the tax rate increases as income rises. Under the Income-tax Act, 1961, taxpayers choose between two regimes: the new regime and the old regime.
In Budget 2025, the Finance Minister announced no income tax will be payable for income up to ₹12 lakh under the new regime, as the rebate has been increased to ₹60,000. The Direct Tax Code will be presented in Parliament next week to introduce tax reforms. The New Income Tax Slab for the new regime for FY 2025-26 (AY 2026-27) has also been announced.
New Income Tax Slab Features
The New Tax Regime 2025 includes various changes to simplify taxation and provide ease to taxpayers. The New Income Tax Slab Features Includes:
- The first ₹3 lakh from the annual income is completely tax-free, offering significant benefits to low-income earners.
- New Income Tax Slab ensures a fair distribution of the tax burden.
- The new regime simplifies tax calculations, making it easier for individuals to understand and comply with the tax system.
New Income Tax Slab Rates
The New Income Tax Slab Rates under the New Tax Regime for FY 2025–26 introduce updated brackets aimed at reducing the tax burden on middle-income earners. Below shared is the simplified revised tax slabs:
| New Income Tax Slab Rates | |
|
Income Range (₹) |
Tax Rate (%) |
|
Up to ₹4,00,000 |
NIL |
|
₹4,00,000 – ₹8,00,000 |
5 |
|
₹8,00,000 – ₹12,00,000 |
10 |
|
₹12,00,000 – ₹16,00,000 |
15 |
|
₹16,00,000 – ₹20,00,000 |
20 |
|
₹20,00,000- ₹24,00,000 |
25 |
|
Above 24,00,000 |
30 |
New Tax Regime vs Old Tax Regime
Below we have shared the comparison between tha New Tax Regime vs Old Tax Regime:
| New Tax Regime vs Old Tax Regime | ||
|
New Tax Regime |
Old Tax Regime |
|
|
Introduction |
Introduced in April 2023 |
Traditional tax regime existing prior to the new regime |
|
Basic Income Exemption Limit |
Rs 3 lakh for all taxpayers |
Varies depending on taxpayer category and deductions |
|
Tax Rates and Slabs |
More income tax slabs with lower rates |
Fewer slabs with comparatively higher rates |
|
Standard Deduction |
Rs 50,000 from salary/pension income |
Available, but limited to specific categories |
|
Employer’s NPS Contribution |
Up to 10% of salary (14% for government employees) |
Deductions available for employer’s NPS contribution |
|
Deductions Available |
Limited to standard deduction and employer’s NPS contribution |
Wide range of deductions under various sections (80C, 80D, etc.) |
|
Flexibility vs. Simplicity |
Simplified structure with fewer deductions |
Offers flexibility with multiple deductions |
|
Tax Planning Strategies |
Requires careful planning due to limited deductions |
Offers more options for tax planning and optimization |
|
Long-term Financial Goals |
May be suitable for individuals seeking simplicity |
Beneficial for those prioritizing tax savings through deductions |
|
Considerations |
Individual income level, eligibility for deductions |
Long-term financial goals, tax planning objectives |
Last updated on July, 2025
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New Income Tax Slab FAQs
Q1. What is the new income tax slab for 2024-25?+
Q2. Is the new tax regime slab 2025-26?+
Q3. What is the new tax rebate for 2024 25?+
Q4. Is 7 lakh income tax free?+
Q5. How upto 12 lakh is tax-free?+
Tags: New Income Tax Slab
