Tax Rate Changes in the 2025 Income Tax Bill: A Comprehensive Analysis
Default Tax Regime – Section 115BAC
The New Regime under section 115BAC would continue to be applicable to an Individual , HUF , Association of Persons (other than Co-Operative Society), Body of Individuals and Artificial Juridical Person. New Regime under section 115BAC would apply by Default unless the assesse exercises an option to opt for the Old Regime.
The rates applicable under the New Regime under Section 115BAC, as well as those applicable under Old Regime , to Individuals, HUF and Others are as under :
| TOTAL INCOME | Tax Rate [ Old Regime ] A.Y. 2025-26 and A.Y, 2026-27 | Tax Rate [ New Regime Under Section 115BAC(1A)] A.Y.2025-26 | Tax Rate [ New Regime under Section 115BAC(1A)] A.Y. 2026-27 |
| Up to Rs.2,50,000 | Nil | Nil | Nil |
| Rs 2,50,001 to Rs 3,00,000 | 5% | Nil | Nil |
| Rs 3,00,001 to Rs 4,00,000 | 5% | 5% | Nil |
| Rs 4,00,001 to Rs 5,00,000 | 5% | 5% | 5% |
| Rs 5,00,001 to Rs 7,00,000 | 20% | 5% | 5% |
| Rs 7,00,001 to Rs 8,00,000 | 20% | 10% | 10% |
| Rs 8,00,001 to Rs 10,00,000 | 20% | 10% | 10% |
| Rs 10,00,001 to Rs 12,00,000 | 30% | 15% | 10% |
| Rs 12,00,001 to Rs 15,00,000 | 30% | 20% | 15% |
| Rs 15,00,001 to Rs 16,00,000 | 30% | 30% | 15% |
| Rs 16,00,001 to Rs 20,00,000 | 30% | 30% | 20% |
| Rs 20,00,001 to Rs 24,00,000 | 30% | 30% | 25% |
| Above Rs 24,00,000 | 30% | 30% | 30% |
The conditions (foregoing of Certain deductions/exemptions) specified under section 115BAC(1A) would have to be fulfilled , unless the assesse opts for the Old Regime by Specifically exercising such option within the prescribed time and in the prescribed manner . There is no change in specified conditions prescribed under the New Regime under Section 115BAC(1A).
The Rebate allowable under Section 87A for a resident individual taxpayer under the New Regime under Section 115BAC(1A) has been increased from Rs 25,000 to Rs 60,000 .
Thereby , in case of a resident Individual with taxable income upto Rs 12 Lakhs(earlier Rs 7 Lakhs), Rebate under section 87A shall be computed as the lower of income tax payable or Rs60,000. As per the Explanatory Memorandum , the rebate shall not be allowed against income taxable at special rates of tax such as capital gains under section 111A , 112 and 112A , and income from winning from lotteries and horse races .
Marginal relief shall also be available to individuals with taxable income above Rs 12 Lakhs.
Tax Rates for Individuals/HUF aged above 60/80 years under Old Regime
Resident individuals aged above 60 years but not more than 80 years
| TOTAL INCOME | Tax Rate A.Y 2025-26 | Tax Rate A.Y 2026-27 |
| Up to Rs 3,00,000 | Nil | |
| Rs 3,00,001 to Rs 5,00,000 | 5% | There are No Changes in the slabs and the Rates. |
| Rs 5,00,001 to Rs 10,00,000 | 20% | |
| Above Rs 10,00,000 | 30% |
Resident Individuals aged above 80 years
| TOTAL INCOME | Tax Rate A.Y. 2025-26 | Tax Rate A.Y. 2026-2027 |
| Up to Rs 5,00,000 | Nil | |
| Rs 5,00,001 to Rs 10,00,000 | 20% | There are no Changes in the slabs and the rates . |
| Above Rs 10,00,000 | 30% |
Surcharge Applicable to Individuals/HUF/AOP/BOI
| TOTAL INCOME | SURCHARGE RATE A.Y. 2025-26 | SURCHARGE RATE A.Y. 2026-27 |
| Exceeding Rs 50 Lakhs but not exceeding Rs 1 Crore | 10% | |
| Exceeding Rs 1 Crore but not exceeding Rs 2 Crore | 15% | There are no Changes in the Rates. |
| Exceeding Rs 2 Crore But not exceeding Rs 5 Crore * | 25% | |
| Exceeding Rs 5 crore * | 37% | |
| Effective tax Rate (above Rs 5 Crore) | 42.744% |
*Surcharge on income from dividend and Capital gains taxable under setions 111A, 112 and 112A is Restricted to 15%.
*In case of AOP having only corporate members, the rate of Surcharge is restricted to 15%.
Tax Rates for Partnership Firms and LLPs
The effective tax Rates (including surcharge and cess ) for Assessment Year 2026-27 Continue to be the same which are as under:
| Person | Total Income (Rs) Upto Rs 1 Crore | Total Income (Rs) Above Rs 1 Crore | |
| Partnership Firms, LLPs | 31.20% | 34.944% | |
Tax Rates for Co-operative Societies
Effective Tax Rate ( including surcharge and cess) for Assessment Year 2026-27 continues to be the same for Co-operative Societies Opting for Taxation under section 115BAD at 25.168% and under Section 115BAE at 17.16% subject to fulfilment of certain conditions which are similar to section 115BAB which is applicable for manufacturing companies.
Tax rates for Co-operative Societies other than those exercising option under sections 115BAD or 115BAE shall be as under:-
Effective Tax rates for Income above ` 30,000 including including surcharge and cess
| Income above Rs 30,000 upto Rs 1 Crore | Income above Rs 1 Crore but less than Rs 10 Crore | Income Above Rs 10 Crore |
| 31.20% | 33.384% | 34.944% |
Tax rates for Income upto ` 30000 is as under:
Rates remain unchanged (10% up to ` 10,000; 20% between ` 10,000 to ` 20,000; and 30% in excess of ` 30,000).
Provisions of sections 115JC and 115JD shall not apply to co-operative societies opting for taxation under section 115BAD or section 115BAE. For other co-operative societies, rate of AMT under section 115JC continues to be 15%
