Income Tax Slab and New Taxation in the Union Budget 2025–26

 

India’s Union Budget 2025–26 matters most to individual taxpayers for one reason: it decides (or confirms) the income-tax slab structure, the default tax regime, and the “fine print” that can change your final outgo—rebates, cess, surcharge, and TDS/TCS rules. While you should always verify the Finance Act / Budget notifications for FY 2025–26 for the final, legally-applicable numbers, the framework below explains how slabs work and how “new taxation” typically shows up in the Budget.

 

1) The slab system: marginal rates, not one flat rate

 

Income tax slabs apply marginally: each portion of income is taxed at its slab’s rate. So moving into a higher slab does not mean your entire income is taxed at the higher rate—only the income above the threshold.

 

2) New vs Old regime: the Budget’s big choice lever

 

In recent years, the “new tax regime” has been positioned as the simpler/default option: lower slab rates but fewer deductions/exemptions (for example, many popular deductions under Chapter VI-A may not apply, depending on rules). The “old regime” usually allows more exemptions/deductions (like certain allowances and savings-based deductions), but with different slab rates.

 

3) A commonly-used “new regime” slab map (illustrative template)

 

The table below is a reference-style slab map that has been widely used in recent years. Use it as a template to read the Budget 2025–26 slab announcement (and replace rates/thresholds if the Budget changes them).

Taxable income slab (₹)	Marginal tax rate
0 – 3,00,000	0%
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%

Don’t forget: final tax = slab tax + 4% health & education cess, and possibly surcharge at higher incomes. Budgets also often tweak the rebate (which can reduce tax to zero up to a threshold) and standard deduction (especially for salaried taxpayers).

4) Graph: how marginal rates step up by slab

 

Marginal Tax Rate by Income Slab (New Regime – template)

 

0–3L        | (0%)

3–6L        | █████ (5%)

6–9L        | ██████████ (10%)

9–12L       | ███████████████ (15%)

12–15L      | ████████████████████ (20%)

15L+        | ██████████████████████████████ (30%)

5) What “new taxation” in Budget 2025–26 usually includes

 

Beyond slabs, the Budget may introduce or adjust:

• Rebate limits (which can eliminate tax for lower/middle incomes)
• Surcharge structure (caps or revised thresholds)
• TDS/TCS rules (rates, thresholds, compliance easing)
• Capital gains holding periods/rates (often a headline change)
• Compliance simplification (pre-filled returns, faceless processes, fewer forms)

 

Quick takeaway

 

To evaluate Union Budget 2025–26 for you personally, focus on: (a) slab thresholds/rates, (b) rebate + standard deduction, and (c) surcharge/cess and any changes to TDS or capital gains. Those levers usually decide whether your tax bill quietly dips—or loudly jumps.

 

Conclusion

 

The Union Budget 2025-26 is a forward-looking document that prioritises ease of compliance and financial relief. By making the New Tax Regime more attractive through broader slabs and higher rebates, the government encourages taxpayers to move away from the deduction-heavy old system. This transition not only simplifies the filing process but also leaves more money in the hands of individuals, effectively driving economic growth through increased consumer spending. For the average taxpayer, this budget is a clear signal to embrace the new, simplified tax structure.