Income tax is one of the most important obligations for every taxpayer in India. Understanding the latest tax slabs and rates helps you plan better and reduce your liability using available deductions and exemptions. In 2025, the government continues with the dual tax system, giving taxpayers the option to choose between the old regime with deductions or the new simplified regime.

This article explains the latest income tax slabs, key differences between old and new regimes, and how you can save more using sections like 80C, 80D, and NPS contributions.

Latest Income Tax Slabs (New Tax Regime 2025)

The new tax regime offers reduced tax rates but without most deductions and exemptions. Here are the slabs:

Rebate under section 87A is available for taxpayers with income up to ₹7,00,000. This makes their effective tax liability zero under the new regime.

Latest Income Tax Slabs (Old Tax Regime 2025)

The old regime allows taxpayers to claim deductions such as under section 80C, 80D, NPS contributions, housing loan interest, and HRA. The rates remain as follows:

Rebate under section 87A is available for income up to ₹5,00,000, making tax liability nil.

Key Differences Between Old and New Tax Regime

• New regime offers lower rates but removes most deductions.
• Old regime allows popular deductions such as:
  • Section 80C for investments in PPF, ELSS, life insurance (read more: Complete guide to Section 80C).
  • Section 80D for health insurance premiums (read: Section 80D benefits).
  • Section 80CCD(1), 80CCD(1B), and 80CCD(2) for NPS contributions (NPS tax benefits explained).
  • Housing loan interest under section 80EEA (Housing loan deduction guide).

Which Regime Should You Choose?

• If you have high investments in tax-saving instruments, the old regime often gives better benefits.
• If you prefer simplicity and do not claim many deductions, the new regime reduces your tax rate.
• Salaried individuals with HRA, home loan, and Section 80C investments usually benefit more under the old regime.
• Self-employed taxpayers or those without major deductions may prefer the new regime.

For detailed comparison, see Old vs New Tax Regime.

Surcharge and Cess

• Surcharge applies on high-income earners:
  • 10% for income above ₹50 lakh.
  • 15% for income above ₹1 crore.
  • 25% for income above ₹2 crore.
  • 37% for income above ₹5 crore.
• Health and Education Cess of 4% applies on income tax and surcharge.

Example of Tax Calculation

For an individual earning ₹12,00,000:

• New Regime:
  • Up to 3,00,000: Nil
  • 3,00,001 – 6,00,000: ₹15,000
  • 6,00,001 – 9,00,000: ₹30,000
  • 9,00,001 – 12,00,000: ₹45,000
  • Total = ₹90,000 + 4% cess = ₹93,600
• Old Regime (with deductions of ₹1.5 lakh under 80C and ₹25,000 under 80D):
  • Taxable Income = ₹10,25,000
  • 2,50,001 – 5,00,000: ₹12,500
  • 5,00,001 – 10,00,000: ₹1,00,000
  • 10,00,001 – 10,25,000: ₹5,000
  • Total = ₹1,17,500 + 4% cess = ₹1,22,200

In this case, the new regime gives lower tax.

Related Reads

• GST Reforms: Public Benefit or Government Revenue
• GST Reforms: Scrap 12% and 28% Rates
• Multiple Taxation in India Explained

Final Thoughts

The government has simplified tax structures under the new regime but kept the old regime for those who prefer deductions. Before filing returns, calculate tax under both regimes and choose the one that reduces your liability. Use online calculators like EasyTaxCalculator to make an informed choice.