FY 2025-26 brings significant changes to India's income tax structure. The new regime now offers total tax exemption up to ₹12 lakh through the Section 87A rebate, and the standard deduction has been increased to ₹75,000. Choosing between old and new regime can save you lakhs — but only if you run the numbers.
New Regime Tax Slabs (FY 2025-26)
- ₹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%
Rebate u/s 87A: Full tax rebate for income up to ₹12 lakh (tax payable becomes zero). Above ₹12 lakh, normal slabs apply. Plus 4% health & education cess on tax.
Old Regime Tax Slabs
- ₹0 – ₹2,50,000: Nil
- ₹2,50,001 – ₹5,00,000: 5%
- ₹5,00,001 – ₹10,00,000: 20%
- Above ₹10,00,000: 30%
Old regime allows deductions — 80C (₹1.5L), HRA, home loan interest (₹2L), NPS (₹50K), health insurance (80D).
Which Regime Should You Choose?
Use the Income Tax Calculator to compare both regimes side by side with your actual numbers. As a rule of thumb: if your total deductions (80C + HRA + home loan + medical insurance) exceed ~₹3 lakh, the old regime likely saves more tax. Otherwise, the new regime wins.
Example: Salary ₹15L, deductions ₹3.2L → Old regime tax: ~₹1.1L. New regime tax: ~₹0.9L. New regime saves ₹20,000. But with higher deductions (₹4.5L+), old regime pulls ahead.
FAQs
Is the ₹12L rebate on total income or taxable income?
On taxable income after standard deduction. If your salary is ₹12,75,000, after ₹75,000 standard deduction, taxable = ₹12,00,000 → zero tax via 87A rebate.
Can I switch regimes every year?
Yes — salaried employees can switch between old and new regime each financial year. Business income has restrictions.
What's the standard deduction for FY 2025-26?
₹75,000 — up from ₹50,000. Available under both old and new regimes.