New income-tax rates take effect from April 1, the first day of the financial year 2025-26. Finance Minister Nirmala Sitharaman had announced several changes to the income-tax slabs under the new tax regime while presenting the Budget for FY26 on February 1.
Salaried individuals with income of up to Rs 12.75 lakh will have to pay no tax under the new regime, with the standard deduction of Rs 75,000 in place. The basic exemption threshold has been raised from Rs 3 lakh to Rs 4 lakh, while the rebate threshold is now Rs 12 lakh against the earlier Rs 7 lakh.
Here are the new income-tax slabs as proposed in the Budget:
"Finance Bill 2025 provides unprecedented tax relief to honour taxpayers," the finance minister had said. Parliament passed the Finance Bill on March 27.
According to Deloitte India’s calculations, a salaried individual with an income of Rs 12 lakh will see her tax outgo being reduced by Rs 83,200 (inclusive of cess). A taxpayer with an income of Rs 16 lakh will save Rs 52,000 post the changes under the the new regime. Those earning Rs 1 crore will save Rs 1,25,840, while those with incomes of Rs 2 crore will see their tax payable going down by Rs 1,31,560 in the financial year 2025-26.
The new tax regime is likely to be more attractive than the old one , unless a substantial house rent allowance (HRA) has been claimed under the latter.
Individuals earning more than Rs 24 lakh will have to claim deductions of at least Rs 8 lakh for the old tax regime to be beneficial for them, Deloitte said. Popular deductions under section 80C (tax saving investment of Rs 1.5 lakh), 80D (health insurance premium of maximum Rs 1 lakh), and 24B (Rs 2 lakh in home loan interest) will not be enough to beat the benefits offered under the new regime.
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