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Important Income Tax Threshold Limits for AY 2025-26 for Individuals
The Income Tax Act for the Assessment Year (AY) 2025-26 introduces key threshold limits and provisions applicable to individuals, encompassing both the old and new tax regimes. Here’s a detailed overview of these provisions to help taxpayers understand their obligations under different scenarios:
1. Basic Exemption Limits
Old Tax Regime:
Income Slab: ₹0 – ₹2,50,000 – Tax Rate: Nil
Income Slab: ₹2,50,001 – ₹5,00,000 – Tax Rate: 5%
Income Slab: ₹5,00,001 – ₹10,00,000 – Tax Rate: 20%
Income Slab: Above ₹10,00,000 – Tax Rate: 30%
New Tax Regime:
Income Slab: ₹0 – ₹3,00,000 – Tax Rate: Nil
Income Slab: ₹3,00,001 – ₹7,00,000 – Tax Rate: 5%
Income Slab: ₹7,00,001 – ₹10,00,000 – Tax Rate: 10%
Income Slab: ₹10,00,001 – ₹12,00,000 – Tax Rate: 15%
Income Slab: ₹12,00,001 – ₹15,00,000 – Tax Rate: 20%
Income Slab: Above ₹15,00,000 – Tax Rate: 30%
2. Surcharge Rates
Surcharge applies to individuals based on total income:
₹50 lakh to ₹1 crore: 10%
₹1 crore to ₹2 crore: 15%
₹2 crore to ₹5 crore: 25%
Above ₹5 crore: 37%
Under the New Regime, the maximum surcharge is capped at 25%. Additionally, for income chargeable under Sections 111A, 112, 112A, and dividend income, the surcharge is limited to 15%.
Cess: A 4% Health and Education Cess is applicable on the total of Income Tax and Surcharge.
3. Income from Salaries
Standard Deduction:
₹50,000 under the Old Regime
₹75,000 under the New Regime
4. Income from House Property
Taxpayers can claim deductions for:
Property Taxes Paid
Interest on Housing Loans (subject to specified conditions and limits)
5. Business and Professional Income
Maintenance of accounts is mandatory if:
Turnover exceeds ₹25 lakh, or
Income exceeds ₹2.5 lakh over the past three years.
Audit is required for income exceeding specified thresholds.
Cash payments above ₹10,000 per day are disallowed as expenses.
6. Presumptive Taxation
Small businesses and professionals can opt for presumptive taxation at predefined rates, simplifying compliance requirements.
7. Capital Gains Tax
Long-Term Capital Gains (LTCG): Tax rate is 12.5% for all assets after July 23, 2024.
Short-Term Capital Gains (STCG): Tax rate is 20% for equity shares and equity-oriented mutual funds after July 23, 2024.
Exemptions:
Investment in NHAI/REC Bonds: Up to ₹50 lakh
Investment in Equity Shares: Up to ₹1.25 lakh (conditions apply)
The Income Tax Act for AY 2025-26 introduces provisions tailored to different income levels and categories. By understanding these thresholds and deductions, taxpayers can better plan their finances and ensure compliance. Always consult a tax professional for personalized guidance.
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