Income Tax Slabs Explained Simply – Old vs New Tax Regime

1. What Are Income Tax Slabs?

Income tax slabs are income ranges on which different tax rates are applied.
As your income increases, the tax rate also increases — this is called progressive taxation.

In India, income tax slabs are decided every year by the Government of India and apply to:

• Salaried individuals
• Freelancers
• Professionals
• Business owners

---

2. How Income Tax Slabs Work in India

Income is divided into parts (slabs), and each slab is taxed at a different rate.

Important:

Tax is not charged on your entire income at the highest rate.
It is calculated slab-by-slab.

Example (simplified):
If a slab is taxed at 20%, only that portion of income is taxed at 20%.

---

3. Income Tax Slabs – New Tax Regime (AY 2026–27)

The New Tax Regime is now the default regime.

New Tax Regime Slab Rates

Annual Income	Tax Rate
Up to ₹3,00,000	Nil
₹3,00,001 – ₹6,00,000	5%
₹6,00,001 – ₹9,00,000	10%
₹9,00,001 – ₹12,00,000	15%
₹12,00,001 – ₹15,00,000	20%
Above ₹15,00,000	30%

Rebate under Section 87A

No tax payable if income is up to ₹7 lakh (after rebate).

Deductions NOT allowed in New Regime:

• 80C (LIC, PF, ELSS)
• 80D (Medical insurance)
• HRA
• Home loan interest (Section 24)
• LTA

---

4. Income Tax Slabs – Old Tax Regime (AY 2026–27)

The Old Tax Regime allows multiple exemptions & deductions.

Old Tax Regime Slab Rates

Annual Income	Tax Rate
Up to ₹2,50,000	Nil
₹2,50,001 – ₹5,00,000	5%
₹5,00,001 – ₹10,00,000	20%
Above ₹10,00,000	30%

Deductions allowed:

• 80C – up to ₹1.5 lakh
• 80D – Medical insurance
• HRA
• LTA
• Home loan interest
• 80CCD (NPS)
• 80G (Donations)

---

5. Old vs New Tax Regime – Comparison

Point	Old Regime	New Regime
Tax slabs	Higher	Lower
Deductions	Allowed	Not allowed
Compliance	More	Simple
Default option	❌ No	✅ Yes
Best for	Investors	Salaried with no investments

---

6. Which Tax Regime Should You Choose?

Choose Old Tax Regime if:

• You invest in LIC, PF, ELSS
• You have home loan
• You claim HRA
• You pay health insurance premiums

Choose New Tax Regime if:

• You don’t invest much
• You want simple filing
• You earn up to ₹7 lakh
• You are a young salaried employee

There is no one-size-fits-all answer.
Tax planning must be done case-by-case.

---

7. Income Tax Slabs for Senior Citizens

Senior Citizen (60–80 years) – Old Regime

• Basic exemption: ₹3,00,000

Super Senior Citizen (80+ years) – Old Regime

• Basic exemption: ₹5,00,000

New Tax Regime does not provide special exemption for seniors.

---

8. Example: Income Tax Calculation (Simple)

For FY 2025–26 (AY 2026–27):

• Tax up to ₹7L → Zero tax (Rebate applies)

Example 2: Salary ₹10,00,000 (Old Regime)

Assume deductions:

• 80C → ₹1.5L
• 80D → ₹25,000

Taxable income: ₹8,25,000

→ Tax lower than New Regime

This shows why calculation is important.

---

9. Common Mistakes While Selecting Tax Regime

• Choosing new regime without calculation
• Forgetting to declare regime to employer
• Ignoring deductions already invested
• Not revising return after wrong selection
• Assuming new regime is always better

These mistakes can lead to higher tax outflow.

---

10. How a CA Helps You Save More Tax

A Chartered Accountant:

• Compares both tax regimes
• Calculates exact tax liability
• Suggests legal tax-saving options
• Files error-free ITR
• Prevents notices & penalties

With professional help, you:

✔ Pay less tax
✔ Avoid mistakes
✔ Get maximum refund

---

Conclusion

Understanding income tax slabs is essential to avoid overpaying tax.
Choosing between the Old and New Tax Regime should always be done after proper calculation.

If you need expert guidance, NDM & Company provides:

• Tax planning
• Regime comparison
• Accurate ITR filing
• CA-assisted compliance

Contact us today for smart tax planning.