Income Tax Guide India - FY 2025-26
Complete guide to income tax slabs, deductions, and tax-saving strategies. Save up to Rs 1.5 lakh under Section 80C and choose between old and new tax regimes.
Income Tax Slabs FY 2025-26
Old RegimeWith Deductions
| Income Range | Tax Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 - Rs 5,00,000 | 5% |
| Rs 5,00,001 - Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
+ 4% Health & Education Cess on total tax
New RegimeDefault from FY 2023-24
| Income Range | Tax Rate |
|---|---|
| Up to Rs 3,00,000 | Nil |
| Rs 3,00,001 - Rs 7,00,000 | 5% |
| Rs 7,00,001 - Rs 10,00,000 | 10% |
| Rs 10,00,001 - Rs 12,00,000 | 15% |
| Rs 12,00,001 - Rs 15,00,000 | 20% |
| Above Rs 15,00,000 | 30% |
Standard deduction of Rs 75,000 available
Section 80C - Save Up to Rs 1.5 Lakh
Section 80C of the Income Tax Act allows you to claim deductions up to Rs 1,50,000 on specified investments and expenses. Here are the best options:
| Investment | Lock-in Period | Expected Returns | Risk Level |
|---|---|---|---|
| ELSS Mutual Funds | 3 years | 12-15% (market-linked) | High |
| PPF (Public Provident Fund) | 15 years | 7.1% (govt. guaranteed) | Low |
| NPS (National Pension System) | Till 60 years | 8-10% (market-linked) | Moderate |
| 5-Year Tax Saving FD | 5 years | 6.5-7.5% | Low |
| NSC (National Savings Certificate) | 5 years | 7.7% | Low |
| Life Insurance Premium | Policy term | 4-6% | Low |
| Sukanya Samriddhi Yojana | 21 years | 8.2% | Low |
Section 80D - Health Insurance
- Self & Family: Up to Rs 25,000 deduction
- Parents (below 60): Additional Rs 25,000
- Parents (above 60): Additional Rs 50,000
- Maximum total deduction: Rs 1,00,000
- Preventive health check-up: Rs 5,000 (within limit)
HRA Exemption
- Actual HRA received
- 50% of basic salary (metro) / 40% (non-metro)
- Rent paid minus 10% of basic salary
- Lowest of the three is exempt
- Only available under Old Tax Regime
Section 80E - Education Loan
- Interest on education loan is fully deductible
- No upper limit on deduction amount
- Available for 8 years from start of repayment
- Loan must be from recognized financial institution
- Available for self, spouse, or children
Section 80CCD(1B) - NPS
- Additional Rs 50,000 deduction over Section 80C
- Total 80C + 80CCD(1B) can be Rs 2,00,000
- Employer contribution up to 10% of basic salary
- Available under both old and new regimes
- Best for long-term retirement planning
Old vs New Tax Regime - Which to Choose?
Choose Old Regime if your total deductions (80C + 80D + HRA + home loan interest) exceed Rs 3-4 lakh per year. This is common for salaried individuals living in rented accommodation in metros with home loans and health insurance.
Choose New Regime if you have minimal investments and no HRA claims. The lower slab rates and standard deduction of Rs 75,000 make it beneficial for those earning Rs 7-12 lakh with fewer deductions.
Quick Decision Rule
If your gross income is Rs 10 lakh and total deductions are above Rs 3.75 lakh, the old regime saves more tax. Below that threshold, the new regime is likely better.