The Government has updated the income tax structure for individuals for FY 2025-26 (Assessment Year 2026-27). Below is a concise guide to the new tax slabs under the new tax regime, what the enhanced rebate means, and how you can plan accordingly.
Quick highlights
- Basic exemption raised to ₹ 4,00,000 under the new regime.
- Section 87A rebate increased so that taxpayers with taxable income up to ₹ 12,00,000 effectively pay no income tax (subject to conditions).
- The new regime now has more intermediate slabs — tax rises gradually from 5% up to 30% for higher income levels.
New tax slabs (FY 2025-26) — New Regime
| Taxable Income (₹) | 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% |
What the rebate means
The enhanced rebate (under Section 87A) means that taxpayers with taxable income up to ₹ 12,00,000 will generally pay **₹ 0** tax under the new regime (assuming other conditions are met). This is a significant win for many middle-income earners. However, you should still compare both regimes to ensure you're on the best path.
Planning tips
- Compare between the old regime and the new regime. If you claim many deductions (80C, 80D, home-loan interest), the old regime might still be beneficial.
- If your income is near ₹ 12 lakh or another slab threshold (e.g., ₹ 24 lakh), you may benefit by planning timing of income, investments or expenses.
- This post is for informational purposes only. Always consult a qualified tax advisor or chartered accountant for your personalised tax planning.