Income Tax Rates FY 2025–26 (AY 2026–27)

Updated Tax Slabs, Rules, Deductions & Complete Guide

Here is the complete and updated guide to Income Tax Rates for FY 2025–26. Whether you follow the New Regime or Old Regime, this page explains the slabs, deductions, exemptions, TDS changes, surcharge rates, and important rules you need to know before filing your ITR.

  • ✔ Latest Tax Slabs for FY 2025–26
  • ✔ Old Regime vs New Regime comparison
  • ✔ Available deductions & exemptions
  • ✔ Changes in rebate u/s 87A
  • ✔ Surcharge, cess & TDS rules
  • ✔ Who should choose which regime?
  • ✔ How to calculate income tax?
  • ✔ Standard deduction details
  • ✔ Capital gains taxation rules
  • ✔ Business income tax rules
  • ✔ House property taxation
  • ✔ Foreign income taxation
  • ✔ Tax filing deadlines & penalties
  • ✔ Complete FAQ section
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Income Tax Slabs for FY 2025–26 (AY 2026–27)

Below are the updated tax slabs under the New Regime and the Old Regime for FY 2025–26. Taxpayers can choose the regime that offers the best benefit based on income, deductions, and exemptions.

💼 New Tax Regime (Default – FY 2025–26)

Income Range Tax Rate
₹0 – ₹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%

Standard Deduction: ₹75,000 (for salaried & pensioners)

Rebate u/s 87A: Available subject to notified income limits under New Regime (as per Finance Act)

📘 Old Tax Regime (With Deductions & Exemptions)

Income Range Tax Rate
₹0 – ₹2,50,000 Nil
₹2,50,001 – ₹5,00,000 5%
₹5,00,001 – ₹10,00,000 20%
Above ₹10,00,000 30%

Standard Deduction: ₹50,000

Rebate u/s 87A: Full tax rebate up to income of ₹5,00,000

Old regime continues to allow major deductions such as: 80C, 80D, HRA, LTA, 24(b), 80CCD(1B), 80G and many more.

New Regime vs Old Regime – Side-by-Side Comparison

Compare the benefits, deductions, exemptions, and tax slabs under both regimes to understand which option is more suitable for your income profile for FY 2025–26.

💼 New Tax Regime (Default)

  • Lower tax slabs
  • Standard Deduction: ₹75,000
  • Rebate u/s 87A up to income of ₹12,75,000
  • No major exemptions or deductions allowed
  • Ideal for taxpayers with low investments
  • Simpler, faster filing process
  • Lower compliance burden

📘 Old Tax Regime (With Deductions)

  • Higher tax slabs compared to new regime
  • Standard Deduction: ₹50,000
  • Rebate u/s 87A up to income of ₹5,00,000
  • Allows 70+ deductions & exemptions:
  • • 80C (PF, LIC, ELSS)
    • 80D (Health Insurance)
    • HRA, LTA, 80CCD(1B), 80G, Home Loan Interest etc.
  • Ideal for taxpayers who claim multiple deductions
  • More documentation required
Quick Tip: If your deductions exceed ₹7–₹8 lakh, the Old Regime is usually better. Otherwise, the New Regime generally results in lower tax liability.

Deductions & Exemptions Under Old Tax Regime (FY 2025–26)

The Old Regime offers more than 70 deductions & exemptions that can significantly reduce your taxable income. Below is a simplified list of the most commonly claimed benefits.

📌 Section 80C (Limit: ₹1,50,000)

  • • Employee Provident Fund (EPF)
  • • Public Provident Fund (PPF)
  • • Life Insurance Premium
  • • ELSS Mutual Funds
  • • Sukanya Samriddhi Yojana (SSY)
  • • 5-Year Bank FD
  • • Tuition Fees for Children
  • • Home Loan Principal Repayment

❤️ Section 80D – Health Insurance

  • • Self / Spouse / Children: up to ₹25,000
  • • Parents (Senior Citizens): up to ₹50,000
  • • Preventive Health Checkup: ₹5,000 (included in above limits)

🏠 House Rent Allowance (HRA)

  • • Available to salaried individuals with rent expense
  • • Exemption depends on Basic Salary + Rent + Metro/Non-Metro
  • • Requires rent receipts

✈️ Leave Travel Allowance (LTA)

  • • For travel within India
  • • 2 journeys allowed in a block of 4 years
  • • Travel tickets required for claim

🏡 Section 24(b) – Home Loan Interest

  • • Interest deduction up to ₹2,00,000
  • • For self-occupied property
  • • No limit for let-out properties (subject to set-off restrictions)

🟦 80CCD(1B) – NPS Additional Deduction

  • • Additional ₹50,000 deduction
  • • Over and above the 80C limit
  • • For contributions to National Pension System

🙏 Section 80G – Donations

  • • 100% deduction (specified funds)
  • • 50% deduction (charitable trusts)
  • • Some donations subject to 10% income limit

📚 Other Important Deductions

  • • 80E – Education Loan Interest (No limit)
  • • 80EEA – Affordable Housing Loan (₹1,50,000)*
  • • 80EEB – Electric Vehicle Loan (₹1,50,000)
  • • 80TTA – Savings Interest (₹10,000)
  • • 80TTB – Senior Citizen Savings Interest (₹50,000)
Note: These deductions are available only in the Old Tax Regime. The New Regime allows only Standard Deduction and a few employer-related benefits.

Capital Gains Tax Rates – FY 2025–26 (AY 2026–27)

Capital Gains Tax depends on the type of asset (Equity, Property, Debt, Gold, Crypto) and the duration of holding. Here are the updated rates for FY 2025–26.

📈 1. Equity Shares & Equity Mutual Funds

Type Holding Period Tax Rate
Short Term Capital Gains (STCG) – Section 111A Less than 12 months 20%
Long Term Capital Gains (LTCG) More than 12 months 12.5% (Above ₹1,25,000)

🏡 2. Real Estate / Property

Type Holding Period Tax Rate
Short Term Capital Gains (STCG) Less than 24 months Taxed at slab rates
Long Term Capital Gains (LTCG) More than 24 months 20% with indexation OR 12.5% without indexation (if opted, subject to conditions)

💼 3. Debt Mutual Funds, Bonds, FDs

Type Holding Period Tax Rate
Capital Gains (STCG / LTCG treated same) Any holding period* Taxed at slab rates

🥇 4. Gold, Digital Gold, Sovereign Gold Bonds

Type Holding Period Tax Rate
Short Term Capital Gains (STCG) Less than 36 months Taxed at slab rates
Long Term Capital Gains (LTCG) More than 36 months 20% with Indexation
Sovereign Gold Bonds (SGB) – on redemption 8 years 0% (Completely tax-free)

🪙 5. Cryptocurrency / Virtual Digital Assets

Type Holding Period Tax Rate
Crypto Gains (STCG & LTCG treated same) Any holding period 30% Flat + 4% Cess
Crypto TDS On each trade 1% TDS under Section 194S
Note: Surcharge and cess apply additionally based on income level. Indexation benefits apply only for certain asset classes under LTCG.

Surcharge & Cess Rates – FY 2025–26 (AY 2026–27)

Surcharge is an additional tax on income tax based on the total taxable income. Health & Education Cess is applied on the total of tax + surcharge. Below are the updated rates for FY 2025–26.

👤 1. Individuals (Both New & Old Regime)

Total Income Surcharge Rate
Up to ₹50,00,000 Nil
₹50,00,001 – ₹1,00,00,000 10%
₹1,00,00,001 – ₹2,00,00,000 15%
₹2,00,00,001 – ₹5,00,00,000 25%
Above ₹5,00,00,000 37%* (Not applicable for some capital gains)
Note: For LTCG u/s 112A, STCG u/s 111A, and other special-rate capital gains, the maximum surcharge is capped at 15%.

🏢 2. Partnership Firms & LLPs

Total Income Surcharge Rate
Up to ₹1,00,00,000 Nil
Above ₹1,00,00,000 12%

🏦 3. Companies

Total Income Surcharge Rate
Up to ₹1,00,00,000 Nil
₹1,00,00,001 – ₹10,00,00,000 7%
Above ₹10,00,00,000 12%

💠 4. Health & Education Cess

Type Cess Rate
Health & Education Cess 4% (on Income Tax + Surcharge)
Summary: Surcharge applies only when income crosses specific thresholds. Cess of 4% is applied uniformly in all cases.

TDS Rates – FY 2025–26 (AY 2026–27)

This table provides a quick summary of major TDS provisions for individuals, businesses, and non-residents.

Nature of Payment Section Threshold / Condition TDS Rate
Salary 192 As per Income Tax Slabs Average rate as per slab
Interest (Bank/Post Office/FIs) 194A ₹10,000 (₹50,000 (100000 for senior citizen on bank and post office interest) 10%
Interest on Securities 193 ₹2,500 10%
Dividend (Company) 194 ₹10,000 10%
Contractors / Sub-contractors 194C Single ≥ ₹30,000 OR Annual ≥ ₹1,00,000 1% (Ind/HUF), 2% (Others)
Rent (Land/Building/Furniture) 194I ₹6,00,000 10%
Rent (Plant & Machinery) 194I ₹6,00,000 2%
Professional / Technical Services 194J ₹50,000 10% (Professional), 2% (Technical)
Commission / Brokerage 194H ₹20,000 2%
Purchase of Goods (Buyer TDS) 194Q Buyer turnover > ₹10 Cr; Purchase > ₹50 Lakh 0.1%
Purchase of Property 194IA Property value > ₹50 Lakh 1%
Cash Withdrawal 194N > ₹1 Crore 2%
Insurance Commission 194D ₹20,000 2%
E-Commerce Participant 194O ₹5 Lakh 0.1%
Transfer of Virtual Digital Assets (Crypto) 194S Any 1%
EPF Withdrawal before 5 yrs 192A ₹50,000 10%
Lottery / Gambling / Game Winnings 194B ₹10,000 30%
NPS Withdrawal 194P Any 10%
Non-Resident – Interest / Dividend / Royalty / Fees / Capital Gains 195 Any 10–20% as applicable
Note: TDS rates are applicable as per threshold limits. Non-residents may be subject to different rates or DTAA benefits. Always verify before deduction.

Worked Examples — FY 2025–26

Illustrative examples to show how income tax is calculated under the Old and New Regimes for individuals.

Example 1 — New Regime
  • Annual Gross Income: ₹15,00,000
  • Standard Deduction: ₹75,000
  • Other deductions: Not allowed under New Regime

Taxable Income = ₹15,00,000 − ₹75,000 = ₹14,25,000

Tax Calculation:

  • Up to ₹4,00,000: 0% = ₹0
  • ₹4,00,001 – ₹8,00,000: 5% of ₹4,00,000 = ₹20,000
  • ₹8,00,001 – ₹1200000: 10% of ₹4,00,000 = ₹40,000
  • ₹12,00,001 – ₹14,25,000: 15% of ₹2,25,000 = ₹33,750

Total Tax Before Cess: ₹93,750

Health & Education Cess @4%: ₹3,750

Total Tax Payable: ₹97,500

Example 2 — Old Regime
  • Annual Gross Income: ₹15,00,000
  • Deductions: ₹1,50,000 (80C) + ₹50,000 (Standard Deduction) = ₹2,00,000

Taxable Income = ₹15,00,000 − ₹2,00,000 = ₹13,00,000

Tax Calculation:

  • Up to ₹2,50,000: 0% = ₹0
  • ₹2,50,001 – ₹5,00,000: 5% of ₹2,50,000 = ₹12,500
  • ₹5,00,001 – ₹10,00,000: 20% of ₹10,00,000 = ₹1,00,000
  • ₹10,00,001 – ₹13,00,000: 30% of ₹3,00,000 = ₹90,000

Total Tax Before Cess: ₹2,02,500

Health & Education Cess @4%: ₹8,100

Total Tax Payable: ₹2,10,600

Note: These examples are for illustration purposes only. Actual tax may vary based on exact income components, deductions, exemptions, surcharge, and other factors. Always use a calculator or consult our expert CA for precise computation.

Frequently Asked Questions (FAQ)

Answers to common queries on Income Tax rates, deductions, TDS, and Old vs New Regime for FY 2025–26.

It depends on your deductions and salary structure. If you have significant deductions like 80C, 80D, HRA, or home loan interest, the Old Regime may be better. If deductions are limited, the New Regime can result in lower tax. Use a tax calculator for precise comparison.

Yes. Standard deduction is available for salaried taxpayers under both regimes. For FY 2025–26, it is ₹75,000 under New Regime and ₹50,000 under Old Regime (illustrative). Always check official notifications before filing.

Cess is 4% on total tax payable (Income Tax + Surcharge, if any) for all categories of taxpayers.

Common deductions include: Section 80C (PF, PPF, ELSS, Life Insurance), 80D (Medical Insurance), HRA, LTA, and Home Loan Interest. Standard deduction of ₹50,000 also applies.

For interest from banks or post office, TDS @10% is applicable if interest exceeds ₹50,000 in a financial year (₹1,00,000 for senior citizens).

Yes. NRIs can file ITR to claim refund if excess TDS is deducted. Ensure PAN and DTAA provisions are properly considered.

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