India’s income tax structure offers taxpayers a choice between two regimes. Selecting the right regime can significantly affect your take-home pay and tax liability. Below is a detailed breakdown of slabs and deductions for the Financial Year 2024-25 (Assessment Year 2025-26).
Tax Slabs Comparison (FY 2024-25)
The New Tax Regime tax slabs have been revised to provide more relief to middle-income earners:
| Tax Rate | New Regime Slabs (FY 2024-25) | Old Regime Slabs (FY 2024-25) |
|---|---|---|
| 0% (Nil) | Up to ₹3,00,000 | Up to ₹2,50,000 |
| 5% | ₹3,00,001 to ₹7,00,000 | ₹2,50,001 to ₹5,00,000 |
| 10% / 20% | ₹7,00,001 to ₹10,00,000 (10%) | ₹5,00,001 to ₹10,00,000 (20%) |
| 15% / 30% | ₹10,00,001 to ₹12,00,000 (15%) | Above ₹10,00,000 (30%) |
| 20% / 30% | ₹12,00,001 to ₹15,00,000 (20%) | Above ₹10,00,000 (30%) |
| 30% | Above ₹15,00,000 | Above ₹10,00,000 |
Key Differences in Deductions
The primary tradeoff between the two regimes lies in deductions:
- New Tax Regime: You lose exemptions like Section 80C (EPF, LIC, ELSS), Section 80D (Health Insurance), and HRA. However, you get a ₹75,000 Standard Deduction, and there is no tax on income up to ₹7 Lakhs due to rebate benefits.
- Old Tax Regime: You can claim deductions up to ₹1.5 Lakh under 80C, ₹50,000 under 80CCD(1B) (NPS), HRA, and up to ₹2 Lakh on home loan interest (Section 24).
Frequently Asked Questions (FAQ)
Can I switch between the old and new tax regimes every year?
Yes, Salaried individuals can choose and switch between the two regimes every financial year when filing their tax returns. However, individuals with Business or Professional income (like freelancers under presumptive taxation) can only switch back to the old regime once in their lifetime.
What is the tax rebate under Section 87A?
In the New Tax Regime, if your net taxable income is below ₹7 Lakhs, you receive a full rebate under Section 87A, reducing your tax liability to zero. In the Old Tax Regime, this rebate is capped at ₹5 Lakhs.
