Budget 2025–26 introduced significant changes to personal income tax — revised slabs, enhanced standard deduction, and the New Tax Regime made the default option. Here's a comprehensive breakdown of what changed and how it impacts your tax planning.
1. New Tax Regime – Revised Slabs (FY 2025–26)
The New Tax Regime (Section 115BAC) is now the default regime for all individuals. The revised slabs are:
- Up to ?3,00,000 — NIL
- ?3,00,001 – ?7,00,000 — 5%
- ?7,00,001 – ?10,00,000 — 10%
- ?10,00,001 – ?12,00,000 — 15%
- ?12,00,001 – ?15,00,000 — 20%
- Above ?15,00,000 — 30%
With the Section 87A rebate, individuals with income up to ?7 lakh have zero tax liability under the New Regime.
2. Standard Deduction Enhanced to ?75,000
The standard deduction for salaried employees and pensioners has been increased from ?50,000 to ?75,000 under the New Tax Regime. This directly reduces your taxable income by ?75,000 without requiring any proof or investment.
- Effective for FY 2025–26 onwards.
- Available only under the New Tax Regime from FY 2024–25.
- Family pensioners get a standard deduction of ?25,000 (enhanced from ?15,000).
3. Old vs New Regime – Which is Better?
The Old Tax Regime still allows key deductions like 80C, 80D, HRA, LTA, home loan interest (Section 24), etc. You should prefer:
- New Regime — if your total deductions (80C + 80D + HRA + others) are less than ~?3.75 lakh
- Old Regime — if your deductions are significant (home loan + 80C + HRA etc.)
You must opt out of the New Regime before the due date of ITR filing if you wish to use the Old Regime (salaried employees must inform their employer at the start of the year).
4. Key Deductions Under Old Regime (Still Applicable)
- Section 80C: Up to ?1.5 lakh (LIC, PPF, ELSS, NSC, home loan principal, tuition fees)
- Section 80D: ?25,000 self + ?50,000 for senior citizen parents (medical insurance)
- Section 24(b): Up to ?2 lakh home loan interest deduction
- HRA: Exempt subject to actual HRA, rent paid, and city (metro/non-metro)
- Section 80CCD(1B): Additional ?50,000 for NPS contribution
- Section 80G: Donations to eligible institutions (50%/100%)
5. ITR Filing Due Dates – FY 2025–26 (AY 2026–27)
- Individuals / HUF (no audit): 31st July 2026
- Businesses requiring audit: 31st October 2026
- Transfer Pricing cases: 30th November 2026
- Belated Return: 31st December 2026
?? Filing after due date attracts late fees up to ?5,000 (?1,000 if income < ?5 lakh) plus interest under Section 234A.
6. TDS Changes Affecting Salaried Employees
- Employers must deduct TDS based on the New Regime by default unless the employee submits a declaration to opt for Old Regime.
- Form 12BB must be submitted to employer with investment declarations at the start of FY.
- New TDS provisions for rent payments above ?50,000/month (Section 194IB by tenants).
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