Income Tax for Salaried in India (FY 2025-26)
This is a working guide for salaried Indians who want to understand how their income is taxed under FY 2025-26 rules, which regime saves more, and which deductions still work. Everything below refers to India Income Tax Department rules; slab and deduction figures are illustrative and should be verified before filing.
Last updated: 15 June 2025
Guides & explainers
Compare
Old vs new tax regime - which saves more?
Worked examples across income brackets.
Old regime
Section 80C deductions in full
Every eligible investment under the Rs 1.5L cap.
Old regime
HRA exemption calculation
Formula, worked example, metro vs non-metro.
Both regimes
Standard deduction explained
Rs 75k (new) vs Rs 50k (old), and how it is applied.
Action
ITR filing step-by-step guide
How to file ITR-1 for salaried on the e-filing portal.
Who is liable to pay income tax in India
Every resident individual whose gross total income exceeds the basic exemption limit (Rs 2.5L under the old regime; Rs 4L under the new regime for FY 2025-26 as per the Finance Act 2025) must file a return and pay tax if a liability arises. Non-residents are taxed only on income earned or received in India. Age matters under the old regime - senior citizens (60-79) get a Rs 3L basic exemption, super seniors (80+) get Rs 5L.
Slabs and rates: new regime (default) - FY 2025-26
- Standard deduction of Rs 75,000 is available (introduced in FY 2024-25, retained for FY 2025-26).
- Employer contribution to NPS under section 80CCD(2) up to 14% of basic salary is allowed.
- Section 87A rebate makes tax zero for taxable income up to Rs 12 lakh.
- Health and education cess of 4% is added on top of the calculated tax.
| Taxable income slab | Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 - Rs 8,00,000 | 5% |
| Rs 8,00,001 - Rs 12,00,000 | 10% |
| Rs 12,00,001 - Rs 16,00,000 | 15% |
| Rs 16,00,001 - Rs 20,00,000 | 20% |
| Rs 20,00,001 - Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Slabs and rates: old regime
- Standard deduction of Rs 50,000 is available.
- Full Section 80C (Rs 1.5L), 80D (medical), 80E (education loan), 80G (donations), HRA, home loan interest, and other deductions apply.
- Section 87A rebate makes tax zero for taxable income up to Rs 5 lakh.
| Taxable income slab | Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 - Rs 5,00,000 | 5% |
| Rs 5,00,001 - Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Which regime should salaried pick for FY 2025-26?
The short answer: if your annual deductions (80C + HRA + home loan interest + 80D + others) add up to less than Rs 4-5 lakh, the new regime is usually better because of the lower slabs and Rs 75,000 standard deduction. If you have a home loan with self-occupied property (Rs 2L interest deduction), maximise 80C, and claim HRA, the old regime often wins. Run the numbers both ways in the online calculator on incometax.gov.in before you decide - the exact break-even depends on your income and deduction mix.
Common deductions salaried Indians use (old regime only)
- Section 80C (Rs 1.5L): PF, ELSS mutual funds, PPF, life insurance premium, home loan principal, tuition fee.
- Section 80D (up to Rs 1L): Medical insurance premium - Rs 25k for self and family under 60, Rs 50k if senior citizen; Rs 50k separately for parents if senior citizen.
- Section 24(b) (Rs 2L): Home loan interest on self-occupied property.
- Section 80E (no cap): Interest on education loan for higher studies, for 8 years.
- Section 80CCD(1B) (Rs 50k): Additional NPS contribution over and above 80C.
- HRA exemption (formula-based): For rented accommodation - see the HRA guide.
When and how to file ITR
For salaried taxpayers with income only from salary and simple interest, ITR-1 (Sahaj) is the correct form. The deadline for FY 2025-26 (Assessment Year 2026-27) is normally 31 July 2026, unless extended. File on incometax.gov.in for free - do not pay a private intermediary for a standard ITR-1. See the ITR filing guide linked below for the step-by-step process.
Frequently Asked Questions
Sources & references
- Income Tax India - e-filing portal — Income Tax Department, Government of India
- Union Budget 2025 - new regime slabs — Ministry of Finance, GoI
- Central Board of Direct Taxes - circulars & notifications — CBDT
Rates, fees, eligibility, and product terms cited on this page reflect the sources above at the time of publication and may have changed since. Always verify directly with the lender or regulator.