New Tax Regime 2025 : The Finance Act 2024 has introduced major changes in the Income Tax system of India. From Assessment Year (AY) 2025-26 i.e. Financial Year (FY) 2024-25, the New Tax Regime under Section 115BAC has become the default tax regime for all individuals, HUFs, AOPs, BOIs, and Artificial Juridical Persons.
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New Tax Regime 2025 – Income Tax Slabs for Central Government Employees (AY 2025-26)
However, taxpayers still have the option to opt out and continue with the Old Tax Regime if they wish to claim deductions and exemptions. This update is especially important for Central Government employees and salaried individuals who need to plan their tax-saving investments.
This article explains the Income Tax Slabs under Old and New Regime (AY 2025-26), rebate under Section 87A, surcharge, marginal relief, and major deductions available.
Income Tax Slabs – Old vs New Regime (FY 2024-25 / AY 2025-26)
1. Individuals (Below 60 Years)
| Income Range | Old Regime Tax Rate | New Regime Tax Rate |
|---|---|---|
| Up to ₹2,50,000 | Nil | Up to ₹3,00,000 – Nil |
| ₹2,50,001 – ₹5,00,000 | 5% | ₹3,00,001 – ₹7,00,000 – 5% |
| ₹5,00,001 – ₹10,00,000 | 20% | ₹7,00,001 – ₹10,00,000 – 10% |
| ₹10,00,001 – ₹12,00,000 | 30% | 15% |
| ₹12,00,001 – ₹15,00,000 | 30% | 20% |
| Above ₹15,00,000 | 30% | 30% |
2. Senior Citizens (60–79 Years)
- Old Regime Exemption Limit: ₹3,00,000
- New Regime Exemption Limit: ₹3,00,000
Slab rates are the same as above, but exemption in the old regime starts at ₹3,00,000.
3. Super Senior Citizens (80+ Years)
- Old Regime Exemption Limit: ₹5,00,000
- New Regime Exemption Limit: ₹3,00,000
Slab rates remain the same.
Rebate Under Section 87A (AY 2025-26)
- Old Regime: Full tax rebate up to ₹12,500 if income ≤ ₹5,00,000.
- New Regime: Full tax rebate up to ₹25,000 if income ≤ ₹7,00,000.
Thus, under the new regime, an individual with income up to ₹7 lakh pays zero tax.
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Surcharge & Marginal Relief (Both Regimes)
- Income above ₹50 lakh – surcharge 10%
- Income above ₹1 crore – surcharge 15%
- Income above ₹2 crore – surcharge 25%
- Income above ₹5 crore – surcharge 37%
(Not applicable on certain capital gains and dividend income where surcharge capped at 15%.)
Health & Education Cess @ 4% applicable on income tax plus surcharge.
Marginal Relief ensures additional tax is not more than income exceeding threshold.
Deductions – Old vs New Tax Regime
Available in New Regime (Limited)
- Section 24(b): Interest on housing loan (for let-out property – no limit).
- Section 80CCD(2): Employer’s contribution to NPS (up to 14% of salary for Govt. employees, 10% for others).
- Section 80CCH: Contribution to Agniveer Corpus Fund.
Available in Old Regime (Comprehensive)
- Section 80C, 80CCC, 80CCD(1): Investments in LIC, PPF, EPF, NSC, tuition fees, housing loan principal (₹1.5 lakh).
- Section 80CCD(1B): Additional NPS deduction (₹50,000).
- Section 80D: Health insurance premium (₹25,000 – ₹1,00,000 depending on age).
- Section 80E, 80EE, 80EEA, 80EEB: Education loan, housing loan, and EV loan interest.
- Section 80G & 80GGA: Donations.
- Section 80U & 80DD: Disability deductions.
- Section 80TTA / 80TTB: Interest on savings accounts / deposits.
Thus, the Old Regime is beneficial for taxpayers with high investments and deductions, while the New Regime suits those with limited exemptions.
Which Tax Regime Should Central Government Employees Choose?
- Choose New Regime if:
- Income is up to ₹7,00,000 (zero tax after rebate).
- You do not claim major deductions like 80C, 80D, HRA, etc.
- Prefer a simple tax structure without investment compulsion.
- Choose Old Regime if:
- You invest in PF, LIC, NPS, home loan, health insurance, etc.
- Your deductions exceed ₹2.5 – ₹3 lakh annually.
- You want to maximize tax savings with exemptions.
FAQs on New Tax Regime 2025 Income Tax Slabs 2025-26
Q1. Is the new tax regime mandatory from FY 2024-25?
No, it is default, but taxpayers can opt for the old regime by filing Form 10-IEA (for business income) or directly in ITR (for salaried/non-business taxpayers).
Q2. What is the basic exemption limit in the new regime?
₹3 lakh for all individuals, regardless of age.
Q3. Can senior citizens still avail higher exemption limits?
Yes, but only in the Old Tax Regime (₹3 lakh for senior citizens, ₹5 lakh for super seniors).
Q4. What is the rebate under Section 87A in the new regime?
Resident individuals with income up to ₹7,00,000 get rebate of ₹25,000, making tax liability zero.
Q5. Which regime is better for salaried government employees?
If they claim high deductions under 80C, 80D, HRA, housing loan, etc., then the Old Regime is better. Otherwise, the New Regime is simpler and tax-free up to ₹7 lakh.
Disclaimer Central Government Employees Tax
This article is for educational purposes only. The income tax laws are subject to amendments, notifications, and clarifications issued by the Government of India and CBDT. Taxpayers are advised to consult a qualified tax advisor or chartered accountant before making financial or tax planning decisions.