Income Tax Slabs and Rates for FY 2024-25 (AY 2025-26)
India's income tax system is progressive, meaning tax rates increase with higher income levels. The income tax slab in India specify the applicable rates for different income brackets and vary based on residential status, age, and type of taxpayer. There are two tax regimes: the new tax regime and the old tax regime. The applicable income tax slabs and rates may change each financial year based on government announcements. This article covers the income tax slabs applicable for the current financial year and new tax regime slabs for FY 2024-25.
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Five Heads of Income as Defined by the Income Tax Act
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Income from Salary
Income from employer, including basic salary, allowances, bonuses, commissions, and perquisites. Salaried individuals can use ITR-1 if this is their only income. -
Income from House Property
Income from letting residential or commercial property, fully or partially. ITR-1 can be used if owning only one house property with no carry-forward loss. -
Income from Capital Gains
Profits from sale of assets like stocks, mutual funds, bonds, or real estate. Gains up to ₹1.25 lakh may use ITR-1, higher or complex gains require ITR-2. -
Income from Business or Profession
Self-employed individuals, freelancers, consultants, and business owners. Filing forms depend on business type and turnover (ITR-3, ITR-4, ITR-5, or ITR-6). -
Income from Other Sources
Residual income such as interest from FDs or savings accounts, dividends, gifts exceeding exemption limits, or lottery winnings. Reporting depends on overall income and ITR form.
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Income Tax Slab Under New Regime for FY 2025-26 (AY 2026-27)
Income (in lakhs) 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% Note: Applicable only under the new regime for FY 2025-26 (AY 2026-27).
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Increased Tax Rebate Limits in Budget 2025
Regime FY 2024-25 FY 2025-26 Old ₹5 lakhs - New ₹7 lakhs ₹12 lakhs -
Standard deduction of ₹75,000 is allowed over ₹12 lakhs under the new regime (total tax-free income ₹12.75 lakhs).
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Comparison of Old vs New Tax Regime (FY 2024-25)
Old Regime Slabs
Income Slab (₹) <60 yrs 60-80 yrs >80 yrs Up to 2,50,000 Nil Nil Nil 2,50,001–3,00,000 5% Nil Nil 3,00,001–5,00,000 5% 5% Nil 5,00,001–10,00,000 20% 20% 20% 10,00,001+ 30% 30% 30% New Regime Slabs (FY 2025-26)
Income Slab (₹) Tax Rate Up to 4,00,000 Nil 4,00,001–8,00,000 5% 8,00,001–12,00,000 10% 12,00,001–16,00,000 15% 16,00,001–20,00,000 20% 20,00,001–24,00,000 25% Above 24,00,000 30% -
Old Tax Regime Features
- Higher tax rates for certain slabs.
- Allows 70+ deductions and exemptions (e.g., Section 80C, HRA, LTA).
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New Tax Regime Features
- Lower tax rates with fewer exemptions/deductions.
- Standard deduction of ₹75,000 allowed.
- Simpler compliance and higher take-home salary for those without significant investments.
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Surcharge on Income Tax
Surcharge is applied if income exceeds specified limits.
Net Income Surcharge Rate (New Regime FY 2025-26) >50 lakh ≤ 1 Cr 10% >1 Cr ≤ 2 Cr 15% >2 Cr ≤ 5 Cr 25% >5 Cr 25% (reduced from 37%) Health & Education Cess: 4% on tax + surcharge.
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Domestic Companies Tax Rate
Condition Tax Rate Turnover ≤ ₹400 Cr 25% Section 115BA 25% Section 115BAA 22% Section 115BAB 15% Others 30% Minimum Alternate Tax (MAT): 15% of book profit (unless exempt under special provisions).
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Foreign Company Tax Rate
AY 2024-25:
- Royalty/Technical fees: 50%
- Other income: 40%
AY 2025-26:
- Royalty/Technical fees: 50%
- Other income: 35%
Surcharge and cess rules apply.
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Senior Citizens Tax Slabs (Old Regime)
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Senior (60–80 yrs):
- Up to ₹3,00,000: Nil
- ₹3,00,001–10,00,000: 20%
- Above ₹10,00,000: 30%
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Super Senior (80+ yrs):
- Up to ₹5,00,000: Nil
- ₹5,00,001–10,00,000: 20%
- Above ₹10,00,000: 30%
New regime has no separate slabs for senior citizens.
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Exemptions/Deductions Under New Regime
- Chapter VI-A: Employer NPS contribution (14%), Section 80JJA, Agniveer Corpus Fund.
- Salary-related: Standard deduction ₹75,000, gratuity, voluntary retirement, transport/conveyance allowances.
- House property: Home loan interest under Section 24.
- Other sources: Gifts up to ₹50,000, family pension deductions.
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Exemptions/Deductions Not Available
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HRA, LTA, other allowances, Section 80C, 80D, 80TTA, home loan interest under Sections 24/80EEA.
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Benefits and Drawbacks
Regime Benefits Drawbacks Old Many exemptions & deductions Complex filing, proof of investments required New Lower tax rates, simpler filing, higher liquidity Fewer deductions, less tax planning flexibility -
How to Calculate Income Tax
- Determine gross taxable income.
- Apply relevant tax slab.
- Add surcharge & cess if applicable.
- Deduct any eligible rebates (e.g., 87A).
Example:
Pooja earns ₹8,50,000 and claims ₹1,50,000 under Section 80C.- Taxable income = ₹8,50,000 – ₹1,50,000 = ₹7,00,000
- Slab: ₹5,00,001–10,00,000 → 20% tax
- Tax = (₹7,00,000 – ₹5,00,000) × 20% = ₹40,000
- Surcharge not applicable.
