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Understanding Income Tax Slabs

1. What Are Income Tax Slabs?

Income tax slabs define the progressive tax rates applied to different income ranges. As your income increases, the applicable tax rate also increases—a system aimed at equity and fairness in taxation.

2. Old Regime vs New Regime

  • Old Regime: Higher tax rates, but allows deductions/exemptions (like 80C, 80D, HRA, etc.).

  • New Regime: Lower base rates but most deductions/exemptions are not allowed

3. New Tax Regime Slabs & Rates (FY 2025–26)

  • ₹0 – ₹3 L: Nil

  • ₹3 L – ₹7 L: 5%

  • ₹7 L – ₹10 L: 10%

  • ₹10 L – ₹12 L: 15%

  • ₹12 L – ₹15 L: 20%

  • ₹15 L – ₹50 L: 30%

  • Above ₹50 L: 30% + surcharge

Also, the standard deduction has been increased to ₹75,000, increasing the effective no-tax threshold

4. Old Tax Regime Slabs & Rates (FY 2025–26, Individuals < 60 years)

  • ₹0 – ₹2.5 L: Nil

  • ₹2.5 L – ₹5 L: 5%

  • ₹5 L – ₹10 L: 20%

  • ₹10 L – ₹50 L: 30%

  • ₹50 L – ₹1 Cr: 30% + 10% surcharge

  • ₹1 Cr – ₹2 Cr: 30% + 15% surcharge

  • ₹2 Cr – ₹5 Cr: 30% + 25% surcharge

  • Above ₹5 Cr: 30% + 37% surcharge

Note: Health & Education cess of 4% applies in both regimes.

5. Which Regime Should You Choose?

Choose the New Regime if:

  • You don’t claim many deductions/exemptions.

  • Your income falls into lower slabs (for significant tax savings).

Choose the Old Regime if:

  • You benefit from deductions under 80C, 80D, HRA, home loan interest, etc.

  • You have structured investments/expenses to reduce taxable income.

To decide, estimate your total savings under each regime. If your deductions exceed the tax saved by lower rates, stick with the Old Regime.

6. Why This Matters

  • Potential Savings: Millions now have zero tax up to ₹7 L (New Regime) or ₹5 L (Old Regime).

  • Financial Planning: Understanding which regime works best for your investments and deductions helps you pay less tax or avoid overpaying.

  • Tax Filing Default Shift: The New Regime is now the default for most taxpayers under FY 2025–26 —so it’s essential to actively evaluate which regime suits you.

Reference Link : https://cleartax.in/s/income-tax-slabs

 

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Understanding Income Tax Slabs

1. What Are Income Tax Slabs? Income tax slabs define the progressive tax rates applied to different income ranges. As your income increases, the applicable tax rate also increases—a system aimed at equity and fairness in taxation. 2. Old Regime vs New Regime Old Regime: Higher tax rates, but allows deductions/exemptions (like 80C, 80D, HRA, etc.). New Regime: Lower base rates but most deductions/exemptions are not allowed 3. New Tax Regime Slabs & Rates (FY 2025–26) ₹0 – ₹3 L: Nil ₹3 L – ₹7 L: 5% ₹7 L – ₹10 L: 10% ₹10 L –

The History Of Income Tax In India

Ancient Beginnings Mentioned in Manu Smriti, with traders & artisans paying ~20% of income; agriculturists paid between 1/6 and 1/10 in kind. Kautilya’s Arthashastra (~230 BC) introduced structured taxation: fixed rates (e.g. 1/6 for farmers), progressive slabs, scheduled payments, tolls, export/import duties First Modern Income Tax – 1860 Introduced by Sir James Wilson to offset losses after the 1857 rebellion. Valid for five years; exempted agricultural income and life‑insurance premiums; recognized Hindu Undivided Families (HUFs) as separate taxable units Income Tax Act of 1918 Expanded to include casual, non-recurring receipts and

What is Income Tax ?

What is Income Tax Income tax is a portion of your earnings that you pay to the government. It’s used to fund vital services like healthcare, education, infrastructure, and national security. TAX – Let’s Start Simple! Think of income tax as your share in keeping the country running. The money you contribute helps maintain public systems that benefit everyone. Why Is It Important? Taxes are essential for national growth. They support development projects, ensure safety, improve public welfare, and help build a better tomorrow. Who Pays It? If your income

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