Compare Income Tax Slabs in India – FY 2025-26 | Ultimate Gain in Taxes Rates

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Compare income tax slabs in India is crucial for effective tax planning and maximizing your savings. The Indian income tax system offers two tax regimes: the Old Tax Regime and the New Tax Regime. Each comes with unique benefits, and choosing the right one depends on your income, deductions, and financial goals.

What Are Income Tax Slabs in India?

Income tax slabs refer to different tax rates applied to various income ranges. The rates vary based on income levels, age, and the chosen tax regime. Knowing these slabs helps taxpayers calculate their income tax liability accurately.

Comparison between New & Old Tax Regime

Income Tax Slabs in India for FY 2025-26 (AY 2026-27)

New Tax Regime

  • ₹0 to ₹3,00,000 – Nil
  • ₹3,00,001 to ₹6,00,000 – 5%
  • ₹6,00,001 to ₹9,00,000 – 10%
  • ₹9,00,001 to ₹12,00,000 – 15%
  • ₹12,00,001 to ₹15,00,000 – 20%
  • Above ₹15,00,000 – 30%

Old Tax Regime

  • ₹0 to ₹2,50,000 – Nil
  • ₹2,50,001 to ₹5,00,000 – 5%
  • ₹5,00,001 to ₹10,00,000 – 20%
  • Above ₹10,00,000 – 30%

The Old Tax Regime offers multiple deductions, including Section 80C, 80D, 80G, etc., while the New Tax Regime has lower rates but limited deductions.

Tax Planning Strategies

Example & Formula

To calculate income tax, use the following formula: Income Tax = (Income – Exemptions – Deductions) x Applicable Tax Rate

Example 1: Income of ₹5,00,000 (New Regime)

  • Income up to ₹3,00,000: Nil
  • Next ₹2,00,000 @ 5% = ₹10,000
  • Rebate under Section 87A: Full rebate up to ₹12,500 for income up to ₹5,00,000, making tax payable ₹0

Example 2: Income of ₹16,00,000 (Old Regime)

  • Income up to ₹2,50,000: Nil
  • Next ₹2,50,000 @ 5% = ₹12,500
  • Next ₹5,00,000 @ 20% = ₹1,00,000
  • Next ₹6,00,000 @ 30% = ₹1,80,000
  • Total Tax Payable: ₹2,92,500

Compare Income Tax Slabs with you Income

Selecting the right tax regime depends on your income, deductions, and financial goals. Those with significant investments and deductions may benefit from the Old Tax Regime, while the New Tax Regime suits individuals with fewer deductions.

Based on the above example comparisons you can define your tax planning strategies. If you face difficulty in calculating it, try our Tax Calculator Tool.

Common Mistakes to Avoid During Tax Filing

Taxpayers often make errors that result in penalties or delayed processing. Here are some common mistakes to avoid:

  1. Not Disclosing All Sources of Income: Ensure you declare income from all sources, including interest, dividends, and freelance work.
  2. Ignoring Deductions and Exemptions: Properly account for all eligible deductions and exemptions to reduce your tax liability.
  3. Incorrect Bank Details: Provide accurate bank account details to avoid refund delays.
  4. Missing Deadlines: Filing taxes after the due date can attract hefty penalties.
  5. Inconsistent Reporting: Ensure your income and deductions are consistent across all documents.

How Tax Planning Can Reduce Your Tax Burden

Effective tax planning helps you save money and reduce your tax liability. Here are some strategies:

  • Invest in Tax-Saving Instruments: Options like ELSS, PPF, and NSC can help reduce taxable income.
  • Optimize Salary Structure: Ensure your salary includes tax-friendly components such as HRA, LTA, and food coupons.
  • Claim Deductions: Make use of deductions under Section 80C, 80D, 80G, and more.
  • Plan for Long-Term Investments: Long-term capital gains are taxed at lower rates compared to short-term gains.

Income Tax Submission Portals in India

Taxpayers in India can file their returns using the following portals:

Do you want to compare it on your own?

Download Our Tax Calculator Tool

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Disclaimer

This article is for informational purposes only. Always consult a tax professional for personalized advice.

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