📌 Introduction
Tax reforms for FY 2025–26, effective April 1, 2025, bring significant relief for middle-income earners. These changes, introduced in Budget 2025, simplify tax structure, increase exemptions, and adjust slabs. Here's a friendly, beginner’s guide from Manika FinTax Solutions to the Top 10 New Income Tax Rules based on ClearTax and other sources
1. New Tax Slabs under the New Regime
Under the revised new tax regime (default option), slabs for FY 2025–26 are:
| Income Range (₹) | Tax Rate |
|---|---|
| 0 – 4,00,000 | 0% |
| 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% |
This is a smoother structure with higher thresholds for lower slabs
Tip: Use this table to estimate your tax using online calculators.
2. Tax Rebate of ₹60,000 under Section 87A
Section 87A rebate now increased to ₹60,000. This effectively makes incomes up to ₹12 lakh (₹12.75 lakh with standard deduction) tax-free
Example:
A ₹12 lakh earner previously paid around ₹80,000 tax; now it's zero
3. Standard Deduction Keeps at ₹75,000
Salaried taxpayers can still claim ₹75,000 standard deduction, which when combined with rebate, makes income below ₹12.75 lakh tax-free
4. Basic Exemption Floor Raised to ₹4 Lakh
Earlier basic exemption under new regime was ₹3 lakh; now it’s ₹4 lakh, benefitting lower-middle-income earners
5. Higher Threshold for 30% Tax Bracket
30% tax now kicks in at ₹24 lakh instead of ₹15 lakh. This offers a breathing space for higher middle-class families
6. Surcharge Capped at 25%
The surcharge for super-rich (above ₹2 crore) has been trimmed to 25% from 37%—max effective tax rate reduced to ~39%
7. TDS and TCS Thresholds Increased
Several thresholds have been raised to ease compliance:
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Interest TDS for senior citizens up to ₹1 lakh annually
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Rent TDS threshold raised from ₹2.4 lakh to ₹6 lakh
TCS on foreign travel and investments now triggers only beyond ₹10 lakh instead of ₹7 lakh financialexpress.com.
8. Filing Time Extended, New ITR Forms
ITR forms for AY 2025–26 (ITR‑1 to ITR‑7) updated and notified. Deadline for revised returns extended from 2 to 4 years
9. Capital Gains & NSS Changes
ClearTax notes the updated Income‑tax Bill introduces smoothened capital gains reporting and tax exemption on certain National Savings Scheme withdrawals post‑Aug 2024 .
10. New Income‑Tax Act Bill in Progress
Parliament introduced the Income‑tax Bill 2025 to replace the 1961 Act—over 536 sections aiming for better clarity, decriminalisation, and digital tax compliance
✅ Real Examples & Savings Snapshot
| Gross Income (₹) | 2024 Tax (New Regime) | 2025 Tax | Savings |
|---|---|---|---|
| 8 lakh | ~₹20,000 | ₹0 | ₹20,000 |
| 12 lakh | ~₹80,000 | ₹0 | ₹80,000 |
| 18 lakh | ₹1.6 lakh | ₹90,000 | ₹70,000 |
| 25 lakh | ₹3.3 lakh | ₹2.2 lakh | ₹1.1 lakh |
Estimates based on Mint and Reuters analysis
🛠️ Practical Tax Tips
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Choose new regime by default; opt-out using Form 10-IEA if old regime works better incometax.gov.in.
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Claim standard deduction and rebate proactively.
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Track TDS/TCS receipts and reconcile with Form 26AS.
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Use high-level tax calculators for personal savings estimates.
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Stay updated and file using revised ITR forms.
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Monitor capital gains and NSS withdrawal guidelines.
🔚 Conclusion
The FY 2025–26 tax changes mark a big win for individual taxpayers—simplified structure, higher exemptions and real savings. Whether you're earning ₹8 lakh or ₹24 lakh, these reforms offer meaningful relief. Familiarise yourself with the slabs and use the resources available to optimize taxation smartly.
❓ FAQs
-
Is zero tax automatic for ₹12 lakh income?
Yes, new regime plus rebate makes income up to ₹12.75 lakh effectively tax-free. -
Can I still use old tax regime?
Absolutely! Opt-out via Form 10-IEA if deductions under old regime suit better. -
Has standard deduction changed?
It’s ₹75,000—no change from last year. -
Who benefits from TDS/TCS updates?
Senior citizens, landlords, and travellers/investors doing moderate transactions. -
Do I need new ITR form?
Yes—use updated AY 2025–26 ITR forms per your income sources.
🔗 Ready to File?
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👉 Contact us now for personalized, paid filing support and expert guidance.
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