Home › Latest Tax Changes
Latest Income Tax Changes FY 2025-26 & Beyond
Every Budget season, one headline goes viral and half the details get lost. For FY 2025-26 (AY 2026-27), the big story is the stronger new regime, but capital gains, TDS thresholds and the new Income-tax Act transition also matter.
What changed vs before
| Area | Earlier position | FY 2025-26 / latest position |
|---|---|---|
| New-regime basic exemption | Nil slab up to ₹3,00,000 | Nil slab up to ₹4,00,000 |
| New-regime slabs | Older new-regime bands | ₹4L bands: 0%, 5%, 10%, 15%, 20%, 25%, 30% |
| Section 87A rebate | Effective relief up to ₹7L in the new regime | Effective relief up to ₹12L normal income for resident individuals |
| Salary standard deduction | ₹50,000 in many earlier comparisons | ₹75,000 in the new regime |
| STCG under 111A | 15% | 20% for transfers on or after 23 July 2024 |
| LTCG under 112A | 10% above ₹1L exemption | 12.5% above ₹1.25L exemption |
| Indexation | Available for several long-term assets | Removed for most assets from 23 July 2024, subject to specific transition rules |
| TDS/TCS thresholds | Lower limits in several sections | Higher limits for selected payments such as bank interest, rent, dividend, commission and professional fees |
| Income-tax law framework | Income-tax Act, 1961 | New Income-tax Act, 2025 framework, expected from 1 April 2026 / AY 2026-27; verify notified text |
Revised new-regime slabs for FY 2025-26
The new regime is the default regime. Income up to ₹4,00,000 is nil, ₹4-8 lakh is 5%, ₹8-12 lakh is 10%, ₹12-16 lakh is 15%, ₹16-20 lakh is 20%, ₹20-24 lakh is 25%, and anything above ₹24 lakh is 30%. For slab-by-slab working, see the income tax slab guide.
Section 87A rebate: why ₹12 lakh became the headline
For resident individuals under the new regime, the Section 87A rebate can wipe out normal slab-rate tax where total income is up to ₹12,00,000. For salaried taxpayers, the ₹75,000 standard deduction means gross salary up to about ₹12.75 lakh can result in nil tax, assuming no special-rate income changes the calculation.
₹75,000 standard deduction for salary
The salary standard deduction in the new regime is ₹75,000. You do not submit bills for it, yet it reduces taxable salary before slab tax is calculated. Check the deductions guide before comparing regimes.
Capital-gains changes from 23 July 2024
For listed equity and equity mutual funds where STT applies, Section 111A short-term capital gains are taxed at 20%. Section 112A long-term gains are taxed at 12.5% after the ₹1,25,000 annual exemption. Most indexation benefits were removed from 23 July 2024, though property transition choices and specific exceptions should be checked carefully. Read the capital gains guide.
Updated TDS and TCS thresholds
Several TDS limits were raised from FY 2025-26, so small taxpayers should see fewer unnecessary deductions. Common examples include higher thresholds for bank interest, senior-citizen interest, rent, dividend, commission/brokerage and professional fees. TCS rules also continue to need attention for foreign remittances and overseas travel packages.
New Income-tax Act, 2025
The new Income-tax Act, 2025 is intended to replace the 1961 Act with cleaner drafting and a simplified structure. The broad expectation is applicability from 1 April 2026 / AY 2026-27, but readers should verify the notified provisions, effective dates and portal instructions. In plain English: do not assume every old section number or wording will remain familiar forever.
How this affects you
Salaried taxpayer
Recheck the new regime. The ₹75,000 standard deduction and ₹12 lakh rebate can make it better than old-regime planning for many people.
Investor
Capital gains need date-wise treatment. Gains after 23 July 2024 should use the updated 111A/112A rates and the new ₹1.25L exemption.
Landlord or consultant
Higher TDS thresholds may reduce deductions, but you still need to pay tax correctly through advance tax or self-assessment tax.
Run your FY 2025-26 numbers
Use the calculator to compare tax, rebate, cess and special-rate capital gains.
Open Calculator →FAQ
Is income up to ₹12 lakh tax-free in FY 2025-26?
For resident individuals under the new regime, Section 87A rebate can make normal slab-rate income up to ₹12,00,000 effectively tax-free. Salaried taxpayers may reach ₹12.75 lakh gross salary after the ₹75,000 standard deduction, excluding special-rate income.
What are the new-regime slabs for FY 2025-26?
The slabs are nil up to ₹4 lakh, 5% for ₹4-8 lakh, 10% for ₹8-12 lakh, 15% for ₹12-16 lakh, 20% for ₹16-20 lakh, 25% for ₹20-24 lakh and 30% above ₹24 lakh.
What changed for capital gains after 23 July 2024?
Section 111A STCG on listed equity and equity mutual funds became 20%, and Section 112A LTCG became 12.5% with a ₹1.25 lakh annual exemption. Indexation was removed for most assets from that date.
Should I verify these changes before filing?
Yes. Tax law, portal utilities and CBDT instructions can change, so always verify against the official income-tax portal, notifications and your AIS/TIS before filing.