As the financial year wraps up and tax filing season approaches, taxpayers are gearing up to file their Income Tax Returns (ITR) for the Assessment Year (AY) 2025-26. With the government now making the new tax regime the default system, many are confused about the latest New Slab Rate for AY 2025-26, which regime to opt for—old or new—and which ITR form to file.
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What is the New Tax Regime for AY 2025-26?
From AY 2025-26, the new tax regime under Section 115BAC has become the default for most taxpayers. This regime offers lower tax rates but removes the benefit of most exemptions and deductions such as HRA, LTA, 80C, etc.
However, if you prefer to stick with the old tax regime—which allows these deductions—you still have the freedom to opt out of the new one while filing your return.
Comparison: Old vs New Slab Rate for AY 2025-26
Here’s a simplified breakdown of the New Slab Rate for AY 2025-26 compared to the old tax regime:
For Individuals Below 60 Years:
| Income Range (₹) | Old Tax Regime | New Tax Regime |
|---|---|---|
| Up to ₹2,50,000 | NIL | NIL (up to ₹3,00,000) |
| ₹2.5L – ₹5L | 5% | 5% (₹3L – ₹7L) |
| ₹5L – ₹10L | 20% | 10% (₹7L – ₹10L) |
| ₹10L – ₹15L | 30% | 15% (₹10L – ₹12L), 20% (₹12L – ₹15L) |
| Above ₹15L | 30% + surcharge | 30% + surcharge |
Rebate:
- Old Regime: Up to ₹12,500 if income ≤ ₹5,00,000
- New Regime: Up to ₹25,000 if income ≤ ₹7,00,000
Cess: 4% Health and Education Cess applies in both regimes.
Which Regime Is Better for You?
The new tax regime is simple and suits individuals who:
- Have fewer investments and deductions.
- Prefer less paperwork.
- Have income within ₹7 lakh (due to full rebate).
The old regime is beneficial for those who:
- Have significant deductions (e.g., home loan, insurance, PPF).
- Want to claim HRA, LTA, 80C, 80D, etc.
Example:
If your annual income is ₹9,00,000 and you claim deductions under 80C, 80D, and HRA totalling ₹2,50,000, the old regime may lead to a lower tax liability. If you don’t have such deductions, the new regime might be simpler and cheaper.
How to Choose the Right ITR Form for AY 2025-26?
Here’s a quick guide to help salaried individuals pick the correct ITR form:
🧾 ITR-1 (SAHAJ)
Use this if you:
- Are a resident individual (not NRI or HUF).
- Earn income from salary, one house property, interest, or family pension.
- Have total income ≤ ₹50 lakh.
- Have agricultural income ≤ ₹5,000.
Avoid this if you:
- Are a company director or own unlisted shares.
- Have foreign income or assets.
- Have income from business/profession.
🧾 ITR-2
Use if you:
- Don’t qualify for ITR-1.
- Don’t have business income.
- Are an individual or HUF with income from capital gains, multiple house properties, or foreign assets.
🧾 ITR-3
Use if you:
- Have income from business or profession.
- Are an individual or HUF with business/profession income that isn’t under presumptive taxation.
🧾 ITR-4 (SUGAM)
Use if you:
- Have presumptive income under Section 44AD, 44ADA, or 44AE.
- Are a resident individual, HUF, or a firm (not LLP) with total income ≤ ₹50 lakh.
- Have income from one house property, salary, or interest.
Don’t use if you:
- Own foreign assets or are a director.
- Have capital gains or speculative income.
Forms You’ll Need for Filing
- Form 16: Provided by your employer, summarizing salary and TDS.
- Form 12BB: Statement for claiming HRA, LTA, and other deductions.
- Form 26AS & AIS: From the income tax portal showing tax deducted, income details, etc.
- Form 10E: Required to claim relief for salary paid in arrears.
- Form 67: If you’ve earned income from outside India and claim foreign tax credit.
- Form 15G/15H: To avoid TDS on bank interest (if applicable).
- Form 10-IEA: Must be filed to opt out of the new regime if you have business/professional income.
Choosing between the old vs new regime depends entirely on your financial planning. The government has made the new system default, but not compulsory. Before you rush to file your taxes, take some time to compare your net tax liability under both regimes.
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Also, be very careful in selecting the right ITR form. Filing the wrong one can lead to processing delays or rejection.
The New Slab Rate for AY 2025-26 gives taxpayers the flexibility to choose what works best for their unique financial profile. Make sure to use the latest forms and file before the due date to avoid penalties and interest.