Income Tax Rates for Individuals and HUF for Assessment Year 2025-26 (Financial Year 2024-25)
As we step into the year 2025, it’s essential to understand how the income tax system in India will affect individuals, businesses, and other taxpayers for the Assessment Year (AY) 2025-26. The taxation system is subject to changes announced by the government through the annual budget, and this impacts tax rates, deductions, exemptions, and other provisions.
In this blog, we will break down the income tax rates for individuals and HUF for AY 2025-26 and other key information you need to know for the upcoming assessment year.
Income Tax Rates- Old vs New Tax Regime
As you might be aware that there are two distinct tax regimes under Income Tax Act in India popularly known as ‘Old Tax Regime’ and ‘New Tax Regime’. New Tax Regime prescribes lower tax rates but allows lower tax deductions to the individual tax payers. From AY 2024-25 onwards, ‘New Tax Regime’ has been made default scheme but you may opt out of new tax regime and opt for old tax regime through filing a declaration of doing so (Declaration not required in case of salaried individuals).
Let’s first start with ‘Old Tax Regime’. Income tax rates under old tax regime are as follows:
INCOME TAX RATES UNDER OLD TAX REGIME
Income Tax Rates for Senior Citizens under Old Tax Regime
In the case of Resident individuals, who is of age of 60 years or more but less than 80 years at any time during the year:
|
Total Income |
Resident Individual (Senior Citizens) |
|
Upto Rs. 3,00,000 |
Nil |
|
Rs. 3,00,001 to Rs. 5,00,000 |
5% |
|
Rs. 5,00,001 to 10,00,000 |
20% |
|
Above Rs. 10,00,000 |
30% |
Income Tax Rates for Super Senior Citizens under Old Tax Regime
In the case of Resident individuals, who is of age of 80 years or more at any time during the previous year:
|
Total Income |
Resident Individual (Super Senior Citizens) |
|
Upto Rs. 5,00,000 |
Nil |
|
Rs. 5,00,001 to Rs. 10,00,000 |
20% |
|
Above Rs, 10,00,000 |
30% |
Income Tax Rates for Individuals (Other than senior & super senior citizens) and HUF
|
Total Income |
Resident Individual (Senior Citizens) |
|
Upto Rs. 2,50,000 |
Nil |
|
Rs. 2,50,001 to Rs. 5,00,000 |
5% |
|
Rs. 5,00,001 to Rs. 10,00,000 |
20% |
|
Above Rs. 10,00,000 |
30% |
Note: The above income tax slabs are also applicable for AOP (other than co-operative societies) or Body of individuals (AOP) or Artificial Juridical Person.
INCOME TAX RATES UNDER NEW TAX REGIME
It should be kept in mind that from AY 2024-25, New Tax Regime is default tax regime. If you don’t opt otherwise, it will be presumed that you want to be taxed under New Tax Regime. Income Tax rates for AY 2025-26 under New Tax Regime are as follows:
Income Tax Rates for Individuals (including senior citizens & super senior citizens) and HUF
|
Current Tax Rates for A.Y. 2024-25 |
Tax rates for A.Y. 2025-26 |
Rate of Tax |
|
Upto Rs. 3,00,000 |
Upto Rs. 3,00,000 |
Nil |
|
From Rs. 3,00,001 to Rs. 6,00,000 |
From Rs. 3,00,001 to Rs. 7,00,000 |
5% |
|
From Rs. 6,00,001 to Rs. 9,00,000 |
From 7,00,001 to Rs. 10,00,000 |
10% |
|
From Rs. 9,00,001 to Rs. 12,00,000 |
From Rs. 10,00,001 to Rs. 12,00,000 |
15% |
|
From 12,00,001 to Rs. 15,00,000 |
From Rs. 12,00,001 to Rs. 15,00,000 |
20% |
|
Above Rs. 15,00,000 |
Above Rs. 15,00,000 |
30% |
Surcharge on Income Tax for A.Y. 2025-26
Whether you opt for New Tax Regime or Old Tax Regime, you will be subject to surcharge on the total tax amount. Surcharge shall be charged on the income tax at the following rates:
|
Sr. No. |
Threshold Limit of Total Income |
Rate of Surcharge (Subject to Marginal Relief) OLD TAX REGIME |
Rate of Surcharge (Subject to Marginal Relief) NEW TAX REGIME |
|
1 |
Where the total income (including the income by way of dividend or income u/s 111A, 112 & 112A) exceeds Rs. 50 Lakhs but does not exceed Rs. 1 crore |
10% of Income Tax |
10% of Income Tax |
|
2 |
Where the total income (including the income by way of dividend or income u/s 111A, 112 & 112A) exceeds Rs. 1 crore but does not exceed Rs. 2 crore |
15% of Income Tax |
15% of Income Tax |
|
3 |
Where the total income (excluding the income by way of dividend or income u/s 115AD(1)(b) or 111A, 112, 112A) exceeds Rs. 2 crore but does not exceed Rs. 5 crore |
25% of Income Tax |
25% of Income Tax |
|
4 |
Where the total income (excluding the income by way of dividend or income u/s 111A, 112, 112A) exceeds Rs. 5 crores |
37% of Income Tax |
25% of Income Tax |
Note: When the total income (including the income by way of dividend u/s 111A, 112 & 112A) exceeds Rs. 2 crores, but it is not covered under Sr. No. 3 or 4 above, the surcharge rate is 15%.
|
Rates of Surcharge are same in case of “New Tax Regime” as well as “Old Tax Regime”. However, the rates of surcharge for individuals and HUF under New Tax Regime shall not exceed 25%. It means that the maximum surcharge rate in “Old Tax Regime” is 37% and maximum surcharge rate in “New Tax Regime” is 25%. |
Marginal Relief in case of Surcharge
In every case where the surcharge is levied, marginal relief is also allowed to the taxpayers where the total income crosses the threshold limit with a marginal amount. Marginal relief is available for an amount of the difference between the excess tax payable (including surcharge) on the income above Rs. 50 Lakhs and the amount of the income that exceeds Rs. 50 Lakhs.
Suppose, an individual taxpayer has a total income of Rs. 51 Lakhs. According to old tax regime, he is liable to pay income tax as below:
- First Rs. 2,50,000: Nil
- Rs. 2,50,001- 5,00,000: @ 5% = Rs. 12,500
- Rs. 5,00,001- Rs. 10,00,000: 20% = Rs. 1,00,000
- Rs. 10,00,001- Rs. 51,00,000: 30% = Rs. 12,00,000
Total Income Tax = 13,12,500. Since, his total income exceeds Rs. 50 lakhs, he is also liable to a surcharge @ 10% of Rs. 13,12,500 = Rs. 131250. It is important to note that his total income above Rs. 50 Lakhs is only Rs. 1,00,000 and he is made liable to pay extra surcharge Rs. 131250. Marginal relief is available in such cases and here in this case, surcharge will be restricted to Rs. 1,00,000. Thus, total income tax payable will be:
Income Tax: 13,12,500
Surcharge: 1,00,000 [Marginal Relief allowed 1,31,250- 1,00,000]
Total Income Tax = 14,12,500 (excluding cess)
Amount of Marginal Relief: Rs. 31,250
Cess on Income Tax and Surcharge
Health and Education Cess @ 4% shall be charged on the amount of income tax inclusive of surcharge.
|
Note: The above income tax rates are also applicable on Association of Persons (AOP) other than co-operative societies, Body of Individuals (BOI) and Artificial Juridical Person (AJP). |
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