The new income tax slabs under the new regime for the FY 2025-26 (AY 2026-27) are as follows: Rs. 0 to Rs. 4 lakh – Nil, Rs. 4 lakh to Rs. 8 lakh – 5%, Rs. 8 lakh to Rs. 12 lakh – 10%, Rs. 12 lakh to Rs. 16 lakh – 15%, Rs. 16 lakh to Rs. 20 lakh – 20%, Rs. 20 lakh to Rs. 24 lakh – 25%, and income above Rs. 24 lakh will be taxed at 30%. The rebate has increased to Rs . 60,000, reducing tax liability to zero for income up to 12 lakhs. However, deductions under sections 80C to 80U, HRA claims, and similar exemptions are not available to be claimed under the new tax regime. Income Tax Slab for New Regime - FY 2025-26 Budget 2025 introduced enhanced tax slabs for FY 2025-26 (AY 2026-27), providing relief for taxpayers. The new tax slabs under the New Tax Regime for FY 2025-26 (AY 2026-25) has an increased basic exemption limit of Rs. 4 lakh meaning, income up to Rs. 4 lakh is completely exempt from tax. The new tax rates aim to ease tax burned on taxpayers and ensure more savings.

The marginal relief on the rebate is still applicable. The rebate is not available for income that is taxed at special rates (e.g., capital gains under section 112A).

Since the standard deduction differs, the taxable income is Rs. 25,000 less under the new regime. We will now understand how to calculate income tax using slab rates. To calculate slab rates, imagine a staircase, where each step denotes the level of income. Tax calculation under the new regime for FY 2024-25 The taxable income under the new regime is Rs 20.25 lakhs. For the first slab, Rs 3 lakhs of the income, the tax is nil. The second slab is income between Rs. 3 lakhs and Rs. 7 lakhs - the next 4 lakhs of income. Tax rate for this slab is 5%, and the income tax on the second slab is Rs 20,000 The third slab is income between Rs. 7 lakhs and Rs. 10 lakhs - the next 3 lakhs. The tax rate for this slab is 10%, and the income tax on the third slab is Rs. 30,000. The fourth slab is income between Rs. 10 lakhs and Rs. 12 lakhs - the next 2 lakhs. The tax rate for this slab is 15%, and the income tax on the fourth slab is Rs. 30,000. The fifth slab is income between Rs. 12 lakhs and Rs. 15 lakhs - the next 3 lakhs. The tax rate for this slab is 20%, and the income tax on the fifth slab is Rs. 60,000. The last slab is for income above Rs. 15 lakhs. The tax rate for this slab is 30%. The income in the last slab is Rs. 5,25,000 (Rs. 20,25,000—Rs. 15,00,000), and the income tax in the last slab is Rs. 1,57,500. Summing up the taxes calculated in all the slabs, the total comes to Rs. 2,97,500 After all the taxes, a 4% health and education cess is added. In this case, the 4% cess amount comes to Rs. 11,900. Total income tax, including cess, is Rs. 3,09,400 Tax calculation under the old regime The taxable income under the old regime is Rs 20.5 lakhs. For the first slab, the income up to Rs 2.5 lakhs is tax-free. So, the income tax on the first slab is nil. The second slab covers income between Rs 2.5 lakhs and Rs 5 lakhs - the next Rs 2.5 lakhs. The tax rate for this slab is 5%, and the income tax on the second slab is Rs 12,500. The third slab covers income between Rs 5 lakhs and Rs 10 lakhs - the next Rs 5 lakhs. The tax rate for this slab is 20%, and the income tax on the third slab is Rs 1,00,000. The fourth slab is for income above Rs 10 lakhs. In this case, the income in this slab is Rs 10.5 lakhs (Rs 20.5 lakhs minus Rs 10 lakhs). The tax rate for this slab is 30%, and the income tax in the fourth slab is Rs 3,15,000. Summing up the taxes calculated in all the slabs, the total comes to Rs 4,27,500. After all the taxes, a 4% health and education cess is added. In this case, the 4% cess amount comes to Rs 17,100. The total income tax, including cess, is Rs 4,44,600. Since the tax payable under the new regime is less than that under the old regime, the new regime is beneficial in this case.