GST & Tax
June 2026
5 min read
SPOTON Team
The new tax regime under Section 115BAC was introduced in Budget 2020 and became the default regime from FY 2023-24 (AY 2024-25). Budget 2025 further liberalised the new regime — effectively making income up to ₹12 lakh tax-free for most salaried individuals. Here is the complete guide for FY 2025-26 (AY 2026-27).
New Tax Regime Slabs for FY 2025-26
- Up to ₹4,00,000: NIL
- ₹4,00,001 to ₹8,00,000: 5%
- ₹8,00,001 to ₹12,00,000: 10%
- ₹12,00,001 to ₹16,00,000: 15%
- ₹16,00,001 to ₹20,00,000: 20%
- ₹20,00,001 to ₹24,00,000: 25%
- Above ₹24,00,000: 30%
Key Benefits Under New Regime
- Section 87A rebate: Full tax rebate for income up to ₹12 lakh — tax payable is NIL (rebate makes effective tax zero even though slabs apply)
- Standard deduction: ₹75,000 for salaried employees and pensioners (enhanced in Budget 2024)
- Income up to ₹12,75,000 for a salaried person = effectively zero tax (₹12 lakh + ₹75,000 standard deduction)
- Employer NPS contribution (Section 80CCD(2)): Deduction available — up to 14% of salary for Central Government employees, 10% for others
- Family pension deduction: Lower of 1/3 of pension or ₹25,000
What Is NOT Available in the New Regime
- No HRA exemption (Section 10(13A))
- No LTA exemption (Section 10(5))
- No deductions under Chapter VIA (80C, 80D, 80E, 80G, 80TTA, etc.)
- No interest deduction on self-occupied property (Section 24(b))
- No professional tax deduction, no entertainment allowance
- Cannot set off house property loss against other income
Old vs New Regime — Quick Decision Guide
- New regime better if: You have few deductions/exemptions; income is below ₹12 lakh; you are a new employee
- Old regime better if: You have significant 80C investments (₹1.5 lakh), home loan interest deduction, HRA and other deductions totalling above ₹3-4 lakh
- Salaried employees can switch regime every year at ITR filing (not mid-year). Business persons can switch only once.
For most salaried employees earning below ₹12.75 lakh — the new regime means zero income tax: But high deduction claimants may still save more in the old regime. SPOTON prepares regime comparison for every client before ITR filing. Call +91 99614 11863.
Conclusion
The new tax regime with ₹12 lakh rebate and ₹75,000 standard deduction is highly attractive for most salaried employees — but a detailed comparison with old regime benefits is essential for taxpayers with large deductions. SPOTON provides personalised regime analysis and ITR filing for salaried and professional taxpayers across Kerala. Contact us for expert income tax planning.
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