Understand the new tax regime slab rates, exclusive benefits, and how to maximize your tax savings for FY 2025-26. Learn about deductions, exemptions, and more.
New Tax Regime Slab Rates
New Regime Exclusive Benefits
Benefits Under Both Regimes
Final Word
FAQs on New Tax Regime Deductions
The new tax regime offers simplified slab rates for taxpayers.
Income Tax Slabs and Rates
The slab rates under the new tax regime for FY 2025-26 are structured to provide tax relief.
Income up to ₹4 lakhs: Nil
Income from ₹4 lakhs to ₹8 lakhs: 5%
Income from ₹8 lakhs to ₹12 lakhs: 10%
Income from ₹12 lakhs to ₹16 lakhs: 15%
Income from ₹16 lakhs to ₹20 lakhs: 20%
Income from ₹20 lakhs to ₹24 lakhs: 25%
Income above ₹24 lakhs: 30%
Standard Deduction
Salaried employees can claim a higher standard deduction under the new regime.
Standard deduction of ₹75,000 for salaried individuals.
Higher than the old regime's ₹50,000 deduction.
Automatically applied when filing ITR.
Employer’s Contribution to Pension Scheme
Employer contributions to NPS are deductible under Section 80CCD(2).
Deduction up to 14% of basic salary for central government employees.
10% of basic salary for other employees.
Encourages long-term retirement savings.
Exemption on Family Pension
Family pension received by family members of deceased employees is partially exempt.
One-third of the pension amount is exempt.
Maximum exemption limit is ₹25,000.
Applicable to non-ex-servicemen families.
Home Loan Interest on Let-Out Property
Interest paid on home loans for let-out properties is deductible.
Entire interest amount deductible against rental income.
No cap on deduction amount.
Section 24(b) of the Income Tax Act applies.
Allowances Exempt Under New Regime
Certain allowances remain exempt under the new regime.
Tour and transfer allowances.
Daily allowances for business trips.
Conveyance allowance for official duties.
Perquisites Exempt Under New Regime
Certain perquisites are not included in taxable salary.
Employer-provided telephone at residence.
Transport facility for official travel.
Group insurance premium paid by employer.
Exemption on Gifts
Gifts received under specific conditions are exempt from tax.
Gifts from relatives are tax-exempt.
Gifts received on weddings are exempt.
Inheritance gifts are not taxable.
Choosing the right tax regime depends on individual financial situations and goals.
Considerations for Taxpayers
Evaluate your financial scenario before opting for a tax regime.
Compare potential savings under both regimes.
Consider long-term financial goals.
Consult with a tax advisor if needed.
What is the standard deduction under the new tax regime?
The standard deduction under the new tax regime for FY 2025-26 is ₹75,000 for salaried individuals, which is higher than the ₹50,000 available under the old regime.
Can I claim home loan interest deduction under the new regime?
Yes, you can claim the entire interest paid on home loans for let-out properties under Section 24(b) without any limit. However, for self-occupied properties, this deduction is only available under the old regime.
Are gifts taxable under the new tax regime?
Gifts received from relatives, on weddings, or as inheritance are exempt from tax under the new regime. Other gifts may be taxable if they exceed ₹50,000 in a financial year.
How does the employer’s contribution to NPS benefit me?
Under Section 80CCD(2), employer contributions to NPS are deductible up to 14% of basic salary for central government employees and 10% for others, reducing your taxable income.
What are the new tax regime slab rates for FY 2025-26?
The slab rates are: Nil for income up to ₹4 lakhs, 5% for ₹4-8 lakhs, 10% for ₹8-12 lakhs, 15% for ₹12-16 lakhs, 20% for ₹16-20 lakhs, 25% for ₹20-24 lakhs, and 30% for income above ₹24 lakhs.
Is the new tax regime beneficial for high-income earners?
High-income earners may benefit from the simplified slab rates and lower tax rates, but they should compare potential savings with deductions available under the old regime.
What allowances are exempt under the new tax regime?
Exempt allowances include those for tour and transfer, daily business trip allowances, and conveyance for official duties. Specific allowances for differently abled employees are also exempt.
Can I switch between the old and new tax regimes?
Salaried individuals can choose between the old and new regimes each year when filing their ITR. However, those with business income can switch only once in a lifetime.