Income Tax basic exemption limit and tax slabs for individuals & HUFs for AY 2026-27 as proposed in Union Budget 2025-26.
Union Finance Minister shall present Union Budget 2025-26 in Parliament on 1st February 2025. Hopes are high that taxpayers shall be given much desired relief in taxation by increasing the threshold (basic exemption slab). It is widely discussed that basic income tax exemption slab should be Rs. 10 Lakhs with or without section 87A rebate i.e. no tax should be payable up to total income of Rs. 10 lakhs . This post shall be updated on 1st February 2025 for the actual changed proposed in basic exemption limits for Financial Year 2025-26 (Assessment Year 2026-27).
As per Budget speech of the Finance Minister, no income tax shall be payable up to income of Rs. 12 lakhs (after considering the rebate under section 87A).
New Income Tax slabs for AY 2026-27 (FY 2025-26) as proposed in Finance Bill 2025 are are as under :
The slabs and rates changed for New Tax Regime but there is no change in slabs or tax rates under old tax regime. No change has been made in old tax regime:
(A) New Tax Regime (AY 2026-27):
(a) Income Tax Slabs
| Upto Rs 4.00 lakhs | Nil |
| Income more than Rs. 4 lakhs up to 8 lakh | 5% |
| Income more than Rs. 8 lakhs up to 12 lakh | 10% |
| Income more than 12 lakhs upto 16 lakhs | 15% |
| Income more than 16 lakhs up to 20 lakhs | 20% |
| Income more than 20 lakhs up to 24 lakhs | 25% |
| Income more than 24 lakhs | 30% |
(b) Comparative Table of tax burden
The Finance Ministry has issued the following Table to illustrate total tax benefit under new tax regime:
(c) Marginal Relief Effect:
Marginal relief under section 115BAC:
Marginal Relief ensures that the tax payable by a person having income marginally above Rs 12 lacs is required to pay only marginal amount of tax equal to the amount of income above Rs 12 lacs so that his carry home is also Rs 12 lacs. In this case he will be required to pay a tax of Rs 10,000/-
For example, for a person having income of Rs. 12,10,000/-, in the absence of marginal relief, the tax, works out to be Rs. 61,500/-(5% of Rs.4 lacs+10% of 4 lac and 15% of Rs.10 thousand). However, due to marginal relief, the amount of tax to be actually paid is Rs. 10,000/- (the amount by which the income exceeds Rs. 12 Lakhs).
The following table gives an example of Marginal relief for various income brackets:
| Taxable Income | Tax without Marginal relief (Rs.) | Marginal Relief (Rs.) | Tax actually payable with marginal relief (Rs.) |
| (a) | (b) | (c) | (d) [(b)+(1200000-(a)] |
| 12,10,000/- | 61,500/- | 51,500/- | 10,000/- |
| 12,50,000 | 67,500/- | 17,500/- | 50,000/- |
| 12,70,000/- | 70,500/- | 500/- | 70,000/- |
| 12,75,000/- | 71,250/- | Nil | 71,250/- |
Download FAQs on Personal Tax Reforms by Budget 2025-26 Click Here >>
(B) Old Tax Regime AY 2026-27:
(i) Individual resident aged below 60 years
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Where the taxable income does not exceed Rs. 2,50,000/-. | Nil |
| ii. | Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. | 5% |
| iii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. | Rs. 12,500/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iv. | Where the taxable income exceeds Rs. 10,00,000/-. | Rs. 112,500/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
(ii) Senior Citizen of the age of 60 years or more but below the age of 80 years
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Up to Rs. 3,00,000/- | NIL |
| ii. | Where the taxable income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/- | 5% |
| iii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | 10,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iv. | Where the taxable income exceeds Rs. 10,00,000/- | Rs. 110,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
(iii) Super Senior Citizen individual resident of the age of 80 years or more
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Up to Rs. 5,00,000/-. | Nil |
| ii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iii. | Where the taxable income exceeds ₹ 10,00,000/- | Rs. 100,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
Income Tax basic exemption limit and tax slabs for individuals & HUFs for AY 2025-26
Currently, The basic income tax exemption limit and tax slabs for individuals under both New Tax Regime and Old tax Regime for AY 2025-26 are as under:
(A) Optional Simplified Personal Tax Regime (New Tax Regime) under section 115BAC, and
(B) Old Tax Regime – Those not exercising option under Simplified Personal Tax Regime
A. New Tax Regime for AY 2025-26
For the AY 2025-26, there is no change in basic exemption limit under New Tax Regime. However tax structure has been revised as under:
| Upto Rs 3.00 lakhs | Nil |
| Income more than Rs. 3 lakhs up to 7 lakh | 5% |
| Income more than Rs. 7 lakhs up to 10 lakh | 10% |
| Income more than 10 lakhs upto 12 lakhs | 15% |
| Income more than 12 lakhs up to 15 lakhs | 20% |
| Income above Rs. 15 Lakhs | 30% |
Simplified Personal Tax Regime for AY 2024-25
Income Tax basic exemption limit and slabs for taxation under Simplified Personal Tax Regime for AY 2024-25 are as under:
| Upto Rs 3.00 lakhs | Nil |
| Income more than Rs. 3 lakhs up to 6 lakh | 5% |
| Income more than Rs. 6 lakhs up to 9 lakh | 10% |
| Income more than 9 lakhs upto 12 lakhs | 15% |
| Income more than 12 lakhs up to 15 lakhs | 20% |
| Income above Rs. 15 Lakhs | 30% |
The assessee opting New Tax Regime are not entitled to claim any deductions.
B. Income Tax Basic Exemption Limit and tax slabs/rates for AY 2025-26 under Old Tax Regime
No changes have been made to the existing basic exemption limit or in tax slabs/rates and will continue the same as for AY 2024-25 as under:
Currently for AY 2024-25 the Income Tax rates and slabs for Individual, HUF, association of persons, body of individuals, artificial juridical person not exercising the option under Simplified Personal Tax Regime are as under:
(i) Individual resident aged below 60 years
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Where the taxable income does not exceed Rs. 2,50,000/-. | Nil |
| ii. | Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. | 5% |
| iii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. | Rs. 12,500/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iv. | Where the taxable income exceeds Rs. 10,00,000/-. | Rs. 112,500/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
(ii) Senior Citizen of the age of 60 years or more but below the age of 80 years
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Up to Rs. 3,00,000/- | NIL |
| ii. | Where the taxable income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/- | 5% |
| iii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | 10,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iv. | Where the taxable income exceeds Rs. 10,00,000/- | Rs. 110,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
(iii) Super Senior Citizen individual resident of the age of 80 years or more
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Up to Rs. 5,00,000/-. | Nil |
| ii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iii. | Where the taxable income exceeds ₹ 10,00,000/- | Rs. 100,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
Surcharge on income tax
(a) based on taxable income including capital gains on equity shares u/s 111A, 112 and 112A
| Up to total income of Rs 50 lakhs | Nil |
| Taxable income exceeding Rs. 50 lacs and upto Rs. 1 crore | 10% |
| Taxable income exceeding Rs. 1 crore but not exceeding Rs. 2 crore | 15% |
| Taxable income exceeding Rs. 2 crore but not exceeding 5 crores | 25% |
| Taxable income exceeding Rs. 5 crore but not exceeding Rs. 10 crores | 37% |
| Taxable income exceeding Rs. 10 crore | 37% |
(i) The maximum rate of surcharge on tax payable on dividend income or capital gain referred to in Section 112, shall be 15%.
(ii) The surcharge rate for AOP with all members as a company, shall be capped at 15%.
For New Tax Regime however the maximum surcharge has been reduced from 37% to 25%
Health and Education Cess:
Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge
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