Paying income tax is a key part of your financial responsibilities, but understanding this whole process can be a bit complex. If you’ve ever found yourself wondering, “What is an income tax slab, and how does it work?” you’re not alone.
Many people struggle to grasp the details of how income tax slabs operate or how they affect their earnings. However, taking the time to understand income tax slabs can do more than just simplify the process of filing your returns. It equips you with the knowledge to plan your finances better and discover ways to save more effectively.
By breaking down the income tax slabs in India, we’ll help you navigate its nuances and explore practical strategies for maximising your savings within your specific tax bracket.
Breaking Down the Tax Slabs by Income Range
India follows a progressive tax system, meaning your tax rate increases as your income rises. To simplify, income is divided into different slabs, each attracting a specific tax rate. Here’s how the income tax slab looks for individuals below 60 years of age for AY 2025-26:
| Annual Taxable Income Slabs (₹) | New Tax Regime Tax Rates |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹6,00,000 | 5% on income exceeding ₹3,00,000 |
| ₹6,00,001 – ₹7,00,000 | 5% on income exceeding ₹3,00,000 |
| ₹7,00,001 – ₹9,00,000 | ₹20,000 + 10% on income exceeding ₹7,00,000 |
| ₹9,00,001 – ₹10,00,000 | ₹20,000 + 10% on income exceeding ₹7,00,000 |
| ₹10,00,001 – ₹12,00,000 | ₹50,000 + 15% on income exceeding ₹10,00,000 |
| ₹12,00,001 – ₹15,00,000 | ₹80,000 + 20% on income exceeding ₹12,00,000 |
| Above ₹15,00,000 | ₹1,40,000 + 30% on income exceeding ₹15,00,000 |
The new tax regime has introduced lower rates but with fewer exemptions compared to the old regime. You can choose between the two each financial year, depending on your financial goals.
Ways to Maximise Savings Within Your Tax Slab
Taxes might feel like a burden, but the Indian tax system provides plenty of avenues to save. Here’s how you can maximise your savings:
1. Utilise Deductions Under Section 80C
- You can decrease your taxable income by investing in financial instruments like:
- Public Provident Fund (PPF)
- National Pension System (NPS)
- Equity Linked Savings Scheme (ELSS)
You’re allowed a maximum deduction of ₹1,50,000 under this section.
2. Health Insurance Premiums
Section 80D lets you claim deductions on health insurance premiums. For yourself, your family, and dependent parents, you can save up to ₹50,000.
3. Home Loan Benefits
If you have a home loan, you can claim:
- Up to ₹2,00,000 on interest payments under Section 24(b)
- An additional ₹1,50,000 under Section 80EEA for first-time homebuyers
4. Take Advantage of NPS
The National Pension System (NPS) allows an extra deduction of ₹50,000 under Section 80CCD(1B) apart from the ₹1,50,000 under Section 80C.
5. Switch to the Right Tax Regime
Compare the old and new regimes to see which one offers the highest savings. If you have a lot of deductions, the old regime might be better. Otherwise, the new regime could help you pay less tax.
Turn Tax Knowledge into Bigger Savings
Understanding income tax slabs and the best ways to save can feel complex, but it doesn’t have to be. By knowing how tax slabs work and using available deductions wisely, you can not only reduce your tax liability but also secure a brighter financial future.
Canara HSBC Life Insurance offers tools and guidance to help you manage your taxes effectively. Partnering with them ensures you make the most of innovative solutions tailored to boost your financial security. Explore their offerings today and take the first step towards a worry-free financial future.
Disclaimer: No Business Standard Journalist was involved in creation of this content