New Income Tax Slab Rates & Deductions for AY 2025-26 (FY 2024-25) as amended by FA (No.2) 2024: Salary, Advance Tax and Special Cases

The financial year (FY) 2024-25 brings updated rates for deduction of income tax at source (TDS) from “Salaries” and computation of “advance tax.” These rates are prescribed in Part III of the First Schedule to the Finance Bill 2024 and are also applicable to the following:

• Provisional assessments for shipping profits earned by non-residents in India.
• Accelerated assessments for individuals leaving India permanently.
• Assessment of persons likely to transfer property to avoid taxes.
• Assessment of bodies formed for a short duration, etc.

These rates govern income-tax deductions for individuals, Hindu Undivided Families (HUFs), associations of persons (AOP), bodies of individuals (BOI), and artificial juridical persons (AJP) for FY 2024-25 (AY 2025-26).

Two Tax Regimes: New Tax Regime & Old Tax Regime

In case of “non-business cases”, option to choose the regime can be exercised every year directly in the ITR to be filed on or before the due date specified under section 139(1).

In case of eligible taxpayers having income from business and profession and wants to opt out of new tax regime, the assessee would be required to furnish Form-10-IEA on or before the due date u/s 139(1) for furnishing the return of income. Also, for the purpose of withdrawal of such option i.e. opting out of old tax regime shall also be done by way of furnishing Form No.10-IEA.

However, in case of eligible taxpayers having income from business and profession option to switch to old tax regime and withdraw the option in any subsequent AY is available only once in lifetime.

New Tax Regime:

For individuals, HUFs, AOPs, BOIs, and artificial juridical persons, the tax rates under section 115BAC (1A) are applicable, as mentioned below:

Rebate:

Tax rebate up to Rs.25,000 is applicable for resident individuals if the total income does not exceed Rs 7,00,000 (not applicable for NRIs and not allowed on Special Rate of Incomes)

Marginal Relief is also available in case of Income more than 700000/-

Deductions Allowed under New Tax Regime

Standard Deduction and Family Pension Deduction

1. Standard Deduction under section 16 of the Income Tax Act, increase from Rs. 50,000 to Rs. 75,000 for taxpayers opting for the new tax regime (section 115BAC).
2. Deduction for family pension under section 57, increase from Rs. 15,000 to Rs. 25,000 for those under the new regime. (1/3 of family pension or Rs.25000 which ever is lower)

Employer Contributions to Pension Schemes – 80CCD(2)

Under section 36 and section 80CCD, employer contributions to pension schemes have been increased from 10% to 14% of the salary for non-government employees. These changes apply to taxpayers under section 115BAC(1A).

Deduction of Agniveer Corpus fund u/s 80CCH:

Deduction in respect of contribution to Agnipath Scheme Where an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after the 1st day of November, 2022, has in the previous year paid or deposited any amount in his account in the said fund Allowed a deduction in the computation of total income, of the whole of the amount so paid or deposited Where the Central Government makes any contribution to the account of an assessee in the Agniveer Corpus Fund Allowed a deduction in the computation of total income of the whole of the amount so contributed

No other Deductions of Exemptions are allowed under New Tax Regime

Old Tax Regime :

Tax rates for Individual (resident or non-resident) less than 60 years of age anytime during the previous year are as under: 

Senior Citizens (60-80 years)

For resident individuals aged 60 years or more but below 80 years, the following rates apply:

Super Senior Citizens (80 years and above)

For resident individuals aged 80 years or more, the rates are:

Standard Deduction from Salary & Pension is allowed Rs.50000

Rebate u/s 87A:

Surcharge Rates

The rates of Surcharge under the tax regimes are as under:

Note: The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112, 112A and Dividend Income. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%, except when the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E.

Health and Education Cess

A 4% Health and Education Cess is applicable on the total income-tax, including surcharge, where applicable.

Tax deductions specified under Chapter VIA of the Income Tax Act  

These deductions will not be available to a taxpayer opting for the New Tax Regime u/s 115BAC, except for deduction u/s 80CCD (2), 80CCH which will be applicable for New Tax Regime as well.

 

Please note: If Taxpayer is claiming deduction u/s 80DD then its recommended to file form 10-IA also before filing of return. Form 10IA can be filed later also however it is recommended to file form 10-IA along with return of income to avoid any inconvenience later.

Please note: If Taxpayer is claiming deduction 80U then it is recommended to file form 10-IA also before filing of return. Form 10IA can be filed later also however it is recommended to file form 10-IA along with return of income to avoid any inconvenience later.

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