Income Tax Slabs for FY 2025-26 under Old Tax Regime

The old tax regime is still the optional tax regime after Budget 2026, and income tax slab rates under old tax regime are as follows:

• The old tax regime offers relaxed tax slabs for senior and super senior citizens.
• For resident taxpayers aged between 60 to 80 years, the basic exemption limit is Rs. 3 lakh i.e., 0% tax on income up to Rs. 3 lakh. 
• For resident taxpayers aged above 80 years, basic exemption limit is Rs. 5 lakhs i.e., 0% tax up to Rs. 5 lakh income.
• All other tax slabs & rates remain the same as in the above table. 

Tax Free Income Under the New Regime

Under the new tax regime, taxpayers with taxable income up to Rs. 12 lakh can reduce their tax liability to Zero under Section 87A rebate provisions. This makes income up to Rs. 12 lakh tax-free in the new tax regime. 

However, salaried individuals can benefit from tax-free income up to Rs. 12.75 lakh with standard deduction. 

Section 87A Rebate & Standard Deduction

Rebate u/s 87A helps taxpayers reduce tax liability to Zero if their taxable income is within certain limits. This provision helps many taxpayers pay Zero tax. 

Salaried taxpayers also get a standard deduction to reduce their taxable salary income by a certain amount. 

The rebate and standard deduction limits under different tax regimes are as follows:

What is Surcharge & Cess?

Taxpayers with high income pay an additional tax on their tax liability called surcharge. The surcharge rates are as follows:

All taxpayers irrespective of their income pay a 4% health & education cess on the tax liability. 

Old v/s New - Which Tax Regime is Better?

Which tax regime is better in comparison to the old & new tax regime depends on the exemptions and deductions available to taxpayers. The new tax regime offers very little deductions when compared to the old tax regime. 

• Choose the new tax regime if you do not have many deductions & exemptions to claim. 
• Choose the old tax regime if you have significant deductions & exemptions to claim. 

Income Tax Calculator

Use ClearTax Income Tax Calculator to calculate your tax liability for FY 2025-26 & FY 2026-27.

How to Calculate Income Tax?

Step 1: Calculate Gross Total Income (salary + house property + business/profession + other sources + capital gains).

Step 2: Reduce eligible deductions/exemptions (based on regime chosen).

Step 3: Arrive at Taxable Income.

Step 4: Apply slab rates and compute tax.

Step 5: Apply rebate if eligible.

Step 6: Add cess @ 4% (and surcharge, if applicable) on tax computed in Step 4.

Step 7: Reduce TDS/TCS/advance tax already paid to find net payable or refund.

Income Tax Calculation Example

Mr. Anban for FY 2025-26 has the following incomes, exemptions and deductions.

• Salary - Rs. 25 lakh
• HRA Exemption Rs. 4 lakh
• 80C Deduction - Rs. 1.5 lakh
• 80D Deduction - Rs. 25,000

His taxable income and tax liability for FY 2025-26 (AY 2026-27) will be computed as follows:

Mr. Anban's Tax Liability will be calculated as follows:

Under New Tax Regime

Under Old Tax Regime

Therefore, tax liability of Mr. Anban for FY 2025-26 (AY 2026-27) is as follows:

Therefore, by opting for New Tax Regime he can save Rs. 70,200 in taxes. However, many deductions & exemptions are not allowed under the new tax regime. 

Conclusion

Understanding the income tax slabs is important while filing Income Tax Returns (ITR). Taxpayers can now compute their tax liability and accertain their tax slab & rate for FY 2025-26 (AY 2026-27).

Also Read:
1. Income Tax Slab For Women FY 2025-26
2. How To Save Taxes Under The New Regime FY 2025-26?
3. Exemption for ITR Filing for Senior Citizens