I-T Bill: Have tax slabs changed in new & old tax regime in FY 2025-26?

Union Finance Minister Nirmala Sitharaman tabled the new direct tax code or the new Income Tax Bill 2025 in Lok Sabha on Thusday. The new Bill consists 23 chapters, 536 sections, and 16 schedules.

 

The bill has introduced the concept of a ‘tax year’ to resolve confusion surrounding the assessment year and financial year.

 

How ‘tax year’ has been defined:

 

“A financial year beginning on the 1st day of April and ending on the 31st day of March of the following year.”

 

Have income tax slabs for FY 2025-26 in the new, old tax regime changed in the new Income Tax Bill?

 

 

“The new Income Tax Bill has not changed income tax slabs and income tax rates as announced in Budget 2025 for the upcoming FY 2025-26. Tax slabs for FY 2025-26 have been done in the Union Budget 2025 itself which was presented on 1st Feb 25. The new Income Tax Bill is proposed to be effective from 1st April 2026,” said Ritika Nayyar, Partner, Singhania & Co.

 

“However, it must be noted that the FM would have the ability to change the tax rates every year because the annual budgeting exercise has not been tinkered with,” said SR Patnaik, Partner (head - taxation), Cyril Amarchand Mangaldas.

  Until March 31, 2025, zero tax is not applicable if the net taxable income exceeds Rs 7 lakh. The income tax slabs under the new tax regime applicable from April 1, 2025, are as follows:

 

Income up to Rs 4 lakh: Nil

 

Income from Rs 4 lakh to Rs 8 lakh: 5 per cent

 

Income from Rs 8 lakh to Rs 12 lakh: 10 per cent

 

Income from Rs 12 lakh to Rs 16 lakh: 15 per cent

 

Income from Rs 16 lakh to Rs 20 lakh: 20 per cent

 

Income from Rs 20 lakh to Rs 24 lakh: 25 per cent

 

Income above Rs 24 lakh: 30 per cent

 

 

Deduction in new tax regime:

 

Section 24(b): Deduction for interest on housing loan for rental property

 

Section 80CCD (2): Deduction for employer’s contribution to the national pension scheme (NPS), limited to 14 per cent of salary

 

Budget 2025 has retained the existing income tax slabs under the old tax regime, with no changes announced for the FY 2025-26.

 

Tax slabs under the old tax regime:

 

Income up to Rs 2,50,000: Nil

 

Income from Rs 2,50,001 to Rs 5,00,000: 5 per cent

 

Income from Rs 5,00,001 to Rs 10,00,000: 20 per cent

 

Income above Rs 10,00,000: 30 per cent

 

The old tax regime also allows for various deductions, including:

 

Section 80C: Deductions up to Rs 1,50,000 for investments in PPF, ELSS, and LIC premiums.

 

Section 80D: Deductions for health insurance premiums.

 

Section 24(b): Deductions for home loan interest up to Rs 2,00,000.

 

Additional exemptions, such as benefits like HRA and LTA.