A Complete Guide to Income Tax Slabs

A Complete Guide to Income Tax Slabs

September 4, 2025

Introduction

Let’s share a secret that we weren’t allowed to give out. Do you know what category of people are reading this article? We know, we know, you’ll say “professionals”, and we’ll appreciate your guess and clap for you. No, you are nowhere close to the correct answer if you guessed that. Almost every individual, professionals, businessmen, house owners, students, home makers, everyone wants accurate knowledge of income tax. What do you think the income tax slabs in India refer to? Can we say that they are the fixed income ranges that show the current income tax rate applicable to individuals? Yes, we missed one thing. These rates are based on the total annual income.

Why did we tell you about the people who are reading this? Because understanding the latest income tax slabs is more than important for every individual. With this information, you can either help yourself or the people around you. So, today, we’ll cover everything you need to know about income tax and any recent changes, if applicable. Wait, that’s not it! After this article, you will also know how to calculate income tax and make the right choice between the old vs new tax regimes. All set? Let’s start!

Returns and Forms Applicable for Salaried Individuals for AY 2025-26

1. ITR-1 (Sahaj): Applicable for salaried employees with income up to ₹50 lakh, including income from salary, one house property, and other sources (excluding lottery winnings and racehorses).
2. ITR-2: Applicable for individuals having income from salary, more than one house property, capital gains, or foreign assets.
3. ITR-3: Applicable for individuals with income from salary, house property, and income from business or profession.
4. ITR-4 (Sugam): Applicable for individuals opting for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE.

NOTE: It is important to choose the correct form to avoid penalties or issues with the Income Tax Department.

Important Points to Note if You Select the New Tax Regime

1. No exemptions and deductions: The new tax regime offers lower tax rates but removes various exemptions and deductions available under the old regime.
2. Optional selection: Taxpayers can choose between the old and new regimes every financial year while filing returns.
3. Standard Deduction: As per Budget 2024, salaried employees can claim a standard deduction of ₹50,000 under the new regime.
4. Ease of filing: With fewer exemptions and deductions, filing returns under the new regime is simpler and less time-consuming.

Exemptions And Deductions Not Claimable Under The New Tax Regime

1. Salary: House Rent Allowance (HRA), Leave Travel Allowance (LTA), Professional Tax
2. House Property: Deduction under Section 24(b) for interest paid on home loans.
3. Other Sources: Family pension deduction under Section 57(iia).
4. Business or Profession: Deductions for various business expenses if the taxpayer opts for the presumptive taxation scheme.
5. Chapter VI A Deductions: Sections 80C, 80D, 80E, 80G, etc., are not applicable.

Revisions to the New Tax Regime in Budget 2024

1. Updated Tax Slabs: Revised income tax slabs for salaried employees and income tax slabs for senior citizens have been announced that provided greater relief to middle-income groups.
2. Increased Standard Deduction: A standard deduction of ₹50,000 is now available under the new regime.
3. Family Pension: Deduction of ₹15,000 for family pensioners is available.
4. NPS Contribution: Additional deduction of ₹50,000 under Section 80CCD(1B) for NPS contributions continues under the new regime.
5. NPS – Vatsalya: Special provisions for women contributors to NPS, offering additional benefits and deductions.

Different Types of Taxable Income in India

1. Income from Salaries
2. Income from Business or Profession
3. Income from House Property
4. Income from Capital Gains
5. Income from Other Sources

Important Points to Consider When Selecting the New Tax Regime

1. Compare tax liability under both regimes.
2. Consider your eligibility for various deductions.
3. Review income sources to determine the applicable tax regime.
4. Plan investments accordingly.

Example of Old Tax Regime vs. New Tax Regime

For instance, if your taxable income is ₹12 lakh:

Under the old regime (with deductions), you may reduce your taxable income to ₹10 lakh, thereby saving taxes.

Under the new regime, if you have no deductions to claim, your tax liability will be calculated directly on ₹12 lakh at applicable rates.

Conclusion

Understanding the differences between the old and new tax regimes, along with the latest income tax slabs, helps you make the right choice. Assess your financial situation, compare regimes, and choose wisely to optimize your tax savings.

Also, if you are looking to apply for an instant personal loan or need an urgent 5000 loan, or maybe an instant loan for women, consider using the best instant loan app for salaried employees. This will help you to get your money fast and have a strong background to help you with deductions.

FAQs

1. What are income tax slabs? Income tax slabs are specific income ranges that determine the rate of tax applicable to an individual based on their total income.
2. How are income tax slabs determined? Income tax slabs are determined by the government through the annual budget, based on economic conditions and fiscal policies.
3. What is the difference between the old and new tax regimes? The old regime offers deductions and exemptions, while the new regime provides lower tax rates with limited deductions.
4. Which tax regime is better for me? It depends on your income level, deductions, and exemptions applicable to you.
5. Do income tax slabs vary for senior citizens? Yes, senior citizens enjoy higher exemption limits and reduced tax rates compared to non-senior citizens.
6. How can I get a loan if my salary is low? There are various apps that have the facility of an online personal loan for low salary holders. You can find the one that best suits you.