The following information is based on the New Income Tax Bill, 2025, which has been passed by the Indian Parliament and is expected to come into effect from April 1, 2026. This bill replaces the Income Tax Act, 1961, and aims to simplify the tax system in India. The tax rates and slabs are consistent with the current year’s Finance Act, 2025, with some notable changes, including the introduction of a new “Tax Year” and an increase in the tax rebate.
New Tax Regime: Tax Slabs and Rates
The new tax regime is the default option for all taxpayers. It features lower tax rates but offers very few exemptions and deductions. As per Clause 202(I) of the New Income Tax Bill, 2025, the following tax rates apply to individuals, Hindu Undivided Families (HUF), and other specified entities:
| Total Income (₹) | Rate of Tax |
| 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% |
Tax Calculation for an income of ₹12 lakh under the new regime:
- First ₹4,00,000: Nil
- Next ₹4,00,000 (from ₹4,00,001 to ₹8,00,000): ₹4,00,000×5%=₹20,000
- Next ₹4,00,000 (from ₹8,00,001 to ₹12,00,000): ₹4,00,000×10%=₹40,000
Total Tax before rebate: ₹20,000+₹40,000=₹60,000
Significant Change: The new bill also increases the tax rebate under Section 87A, making the total tax liability zero for individuals with a taxable income up to ₹12 lakh under this regime.
Old Tax Regime: Tax Slabs and Rates
The old tax regime, which allows for various exemptions and deductions (like those under Section 80C, 80D, etc.), remains an option for taxpayers. The tax rates for this regime are determined by the annual Finance Bills and are currently as follows, categorized by age:
General Citizens (below 60 years of age):
| Income Slab (₹) | Tax Rate |
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior Citizens (age 60 to <80):
| Income Slab (₹) | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Super Senior Citizens (age 80 and above):
| Income Slab (₹) | Tax Rate |
| Up to ₹5,00,000 | Nil |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Tax Calculation for a ₹12 lakh income (General Citizen) under the old regime:
- First ₹2,50,000: Nil
- Next ₹2,50,000 (from ₹2,50,001 to ₹5,00,000): ₹2,50,000×5%=₹12,500
- Next ₹5,00,000 (from ₹5,00,001 to ₹10,00,000): ₹5,00,000×20%=₹1,00,000
- Remaining ₹2,00,000 (from ₹10,00,001 to ₹12,00,000): ₹2,00,000×30%=₹60,000
Total Tax before deductions: ₹12,500+₹1,00,000+₹60,000=₹1,72,500
Disclaimer: This information is based on the provisions of the New Income Tax Bill, 2025, which is set to become law from April 1, 2026. The actual tax liability under the old regime can be significantly reduced by claiming various deductions and exemptions.