{"id":17769,"date":"2026-03-31T04:47:06","date_gmt":"2026-03-31T04:47:06","guid":{"rendered":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/?p=17769"},"modified":"2026-03-31T04:49:59","modified_gmt":"2026-03-31T04:49:59","slug":"new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs","status":"publish","type":"post","link":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/","title":{"rendered":"2025 Tax Reforms India"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"income-tax-for-individuals\"><span class=\"ez-toc-section\" id=\"Income_Tax_For_Individuals\"><\/span>Income Tax For Individuals<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the new tax regime, exemption (rebate) has been raised to the level that individuals having an income of \u20b912 lakh (\u20b912,00,000) per annum need not pay any tax.<\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_83 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #0c0c0c;color:#0c0c0c\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #0c0c0c;color:#0c0c0c\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Income_Tax_For_Individuals\" >Income Tax For Individuals<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#New_Tax_Slabs_Under_The_New_Tax_Regime_Applicable_FY_2025-26_AY_2026-27\" >New Tax Slabs Under The New Tax Regime (Applicable FY 2025-26 \/ AY 2026-27)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Important_Caveats\" >Important Caveats<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Other_Individual-Relief_Provisions\" >Other Individual-Relief Provisions<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Corporate_Business_International_Tax_Changes\" >Corporate \/ Business \/ International Tax Changes<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Transfer_Pricing_TP_International_Transaction_Reforms\" >Transfer Pricing (TP) &amp; International Transaction Reforms<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Others_Deductions_Exemptions\" >Others \/ Deductions \/ Exemptions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Indirect_Tax_Goods_And_Services_Tax_GST_Reforms\" >Indirect Tax \/ Goods And Services Tax (GST) Reforms<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Key_Features_Of_This_GST_Reform\" >Key Features Of This GST Reform<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Compliance_Litigation_And_Legal_Framework_Reforms\" >Compliance, Litigation And Legal Framework Reforms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Sector-Specific_Incentive-Driven_Measures\" >Sector-Specific &amp; Incentive-Driven Measures<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#Implications_Key_Take-Away_Points\" >Implications &amp; Key Take-Away Points<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.legalserviceindia.com\/Legal-Articles\/new-tax-regime-india-2025-26-gst-reforms-income-tax-slabs\/#What_To_Watch_Upcoming_Changes\" >What To Watch \/ Upcoming Changes<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<p>For salaried taxpayers, because of a base deduction of \u20b975,000, the effective threshold becomes \u20b912.75 lakh.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"new-tax-slabs-fy-2025-26\"><span class=\"ez-toc-section\" id=\"New_Tax_Slabs_Under_The_New_Tax_Regime_Applicable_FY_2025-26_AY_2026-27\"><\/span>New Tax Slabs Under The New Tax Regime (Applicable FY 2025-26 \/ AY 2026-27)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Income (\u20b9)<\/th><th>Tax Rate<\/th><\/tr><\/thead><tbody><tr><td>0 \u2013 4,00,000<\/td><td>Nil<\/td><\/tr><tr><td>&gt;4,00,000 \u2013 8,00,000<\/td><td>5%<\/td><\/tr><tr><td>&gt;8,00,000 \u2013 12,00,000<\/td><td>10%<\/td><\/tr><tr><td>&gt;12,00,000 \u2013 16,00,000<\/td><td>15%<\/td><\/tr><tr><td>&gt;16,00,000 \u2013 20,00,000<\/td><td>20%<\/td><\/tr><tr><td>&gt;20,00,000 \u2013 24,00,000<\/td><td>25%<\/td><\/tr><tr><td>&gt;24,00,000<\/td><td>30%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"important-caveats\"><span class=\"ez-toc-section\" id=\"Important_Caveats\"><\/span>Important Caveats<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>These slabs are retained under the new tax regime (under section 115BAC) \u2014 the old\/older tax regime remains intact.<\/li>\n\n\n\n<li>Incomes levied at special\/flat rates (like some capital gains, winnings) may be below the rebate threshold and thus will not gain from the rebate threshold.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"other-individual-relief-provisions\"><span class=\"ez-toc-section\" id=\"Other_Individual-Relief_Provisions\"><\/span>Other Individual-Relief Provisions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Limit of TDS for interest income of senior citizens raised from \u20b950,000 to \u20b91 lakh.<\/li>\n\n\n\n<li>For other resident individuals, TDS threshold on interest has also been relaxed (e.g., from \u20b940,000 to \u20b950,000) and on mutual fund dividends from \u20b95,000 to \u20b910,000.<\/li>\n\n\n\n<li>The time limit for submitting a revised return (to complete omissions) has been raised from 2 years to 4 years.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"corporate-business-international-tax-changes\"><span class=\"ez-toc-section\" id=\"Corporate_Business_International_Tax_Changes\"><\/span>Corporate \/ Business \/ International Tax Changes<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>No shift in the headline corporate tax rate in the Indian firm&#8217;s Budget.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"transfer-pricing-reforms\"><span class=\"ez-toc-section\" id=\"Transfer_Pricing_TP_International_Transaction_Reforms\"><\/span>Transfer Pricing (TP) &amp; International Transaction Reforms<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Budget suggests provisions allowing similar international or listed domestic transactions to avail the same arm&#8217;s length price for a 3-year block period from April 1, 2026, ease of compliance\/disputes.<\/li>\n\n\n\n<li>Safe-harbour rules and documentation rationalisation to eliminate litigation.<\/li>\n<\/ul>\n\n\n\n<p>Presumptive tax for non-resident corporations in the electronics manufacturing units sector: a regime where 25 % of gross turnover is taken as taxable revenue, in the case of ESDM (electronics system design &amp; manufacturing) units.<\/p>\n\n\n\n<p>The government also introduced a fresh direct tax bill: a revamped version of the Income tax Act to replace the twenty-year-old law (see section below under compliance\/legal reforms).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"deductions-exemptions\"><span class=\"ez-toc-section\" id=\"Others_Deductions_Exemptions\"><\/span>Others \/ Deductions \/ Exemptions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Salaried taxpayers still retain the normal deduction (at \u20b975,000 in the new regime).<\/li>\n\n\n\n<li>Specific savings\/investments: e.g., NPS withdrawals on or after Aug 29 2024, are tax-free.<\/li>\n\n\n\n<li>Note: Some tax benefits of the old regime (e.g., senior citizens&#8217; enhanced limits) continue as before.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"gst-reforms\"><span class=\"ez-toc-section\" id=\"Indirect_Tax_Goods_And_Services_Tax_GST_Reforms\"><\/span>Indirect Tax \/ Goods And Services Tax (GST) Reforms<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Major reform: Govt on Sept 22, 2025 introduced a sweeping GST reform (at times called &#8220;GST 2.0&#8221;).<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"gst-key-features\"><span class=\"ez-toc-section\" id=\"Key_Features_Of_This_GST_Reform\"><\/span>Key Features Of This GST Reform<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The four\u2010slab GST regime (5\u2009%, 12\u2009%, 18\u2009%, 28\u2009%) has been simplified to key slabs of 5% and 18%. Added a fresh special rate of 40% on &#8220;luxury\/sin goods&#8221; (luxury automobiles, cigarettes).<\/li>\n\n\n\n<li>Essentials \/ merit goods such as soaps, toothpaste, packaged foods, small-cars, ACs, televisions: some of these have been brought down to 5% or 18% reducing cost to the consumer.<\/li>\n\n\n\n<li>Individual health &amp; life insurance products have been exempted from GST.<\/li>\n\n\n\n<li>The reform is to stimulate domestic demand and simplify compliance for traders\/businesses.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"compliance-legal-framework-reforms\"><span class=\"ez-toc-section\" id=\"Compliance_Litigation_And_Legal_Framework_Reforms\"><\/span>Compliance, Litigation And Legal Framework Reforms<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The government is making the direct tax law simpler: A new bill\u2014Income-tax (No. 2) Bill, 2025\u2014is introduced, cutting down the number of sections from the earlier Act (e.g., from ~819 sections to ~536) and re-organising chapters to improve ease.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The aim is to reduce litigation, simplify tax collection and promote voluntary compliance.<\/li>\n\n\n\n<li>Rationalisation of TDS\/TCS rates, threshold levels and simplicity of compliance burden.<\/li>\n<\/ul>\n\n\n\n<p>Eg: raising thresholds for TDS on interest, rent, remittances.<\/p>\n\n\n\n<p>For example: TCS (Tax Collected at Source) threshold on remittances under the LRS (Liberalised Remittance Scheme) has been raised to \u20b910 lakh from \u20b97 lakh.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"sector-specific-measures\"><span class=\"ez-toc-section\" id=\"Sector-Specific_Incentive-Driven_Measures\"><\/span>Sector-Specific &amp; Incentive-Driven Measures<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This year\u2019s Budget really puts the spotlight on manufacturing, especially electronics. By rolling out things like presumptive taxation for ESDM units, the government is making it easier for foreign companies to set up shop in India.<\/p>\n\n\n\n<p>There\u2019s also a clear focus on the middle class and boosting spending. Changes like higher exemption limits, revised tax slabs, and GST cuts are all designed to get people to spend more, save more, and invest.<\/p>\n\n\n\n<p>Sure, we don\u2019t have every detail yet, but it\u2019s obvious these reforms are setting the stage for tax regimes that actually help growth in sectors like manufacturing and exports. We\u2019ll get the specifics as new rules come out.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"implications-key-takeaways\"><span class=\"ez-toc-section\" id=\"Implications_Key_Take-Away_Points\"><\/span>Implications &amp; Key Take-Away Points<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>If you\u2019re earning up to about \u20b912 lakh (\u20b912.75 lakh if you count the standard deduction on your salary), you won\u2019t pay any income tax under the new system. That\u2019s more money in your pocket.<\/li>\n\n\n\n<li>For people in the middle and upper-middle income range, the new tax slabs lower your tax bill in many cases. But if you\u2019re in the very high-income group, not much changes\u2014the surcharge rules are basically the same.<\/li>\n\n\n\n<li>On the paperwork front, life gets a bit easier. With simpler rules, higher thresholds for TDS and TCS, and more time to update your returns, you\u2019re not under as much pressure to comply.<\/li>\n\n\n\n<li>For companies\u2014including multinationals\u2014the changes around transfer pricing and expanded presumptive schemes are a clear win. These tweaks make it easier to do business in India.<\/li>\n\n\n\n<li>On the consumer side, GST rates have dropped for a bunch of everyday goods. That means things get a little cheaper, and people might spend more, which should give demand a bit of a push.<\/li>\n\n\n\n<li>Now, the flip side: the government gives up some revenue with these tax breaks. They\u2019ll have to make up for it somewhere, maybe by finding new ways to grow the tax base or boost economic growth.<\/li>\n<\/ul>\n\n\n\n<p>A quick heads-up\u2014dig into the details. The old tax regime is still around. Not every type of income gets the same benefit: capital gains and lottery winnings, for example, mostly stay out. And if you\u2019re earning way at the top, your effective rate doesn\u2019t really shift. Each relief or incentive comes with its own rulebook, so keep an eye out for updates as the notifications roll in.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"upcoming-changes\"><span class=\"ez-toc-section\" id=\"What_To_Watch_Upcoming_Changes\"><\/span>What To Watch \/ Upcoming Changes<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Finishing up the rules under the new Income-tax Bill is a big deal\u2014everyone\u2019s waiting to see the exact wording, who\u2019s actually covered, how the transition from old to new will work, and what happens to people caught between both systems.<\/li>\n\n\n\n<li>Then there\u2019s GST 2.0. Expect a long list of goods and services moving to different tax slabs. That\u2019s going to shake things up for businesses and traders, and the compliance process will change too.<\/li>\n\n\n\n<li>Keep an eye out for new notifications or rules about presumptive tax schemes, especially for non-residents and manufacturing companies.<\/li>\n\n\n\n<li>The government might also roll out more details for sectors like digital assets and cryptocurrency. There\u2019s a good chance we\u2019ll see fresh notifications or even separate tax provisions here.<\/li>\n\n\n\n<li>On top of all this, states will probably tweak their own tax incentives\u2014things like state GST or local levies\u2014to line up with what\u2019s happening at the central level.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Income Tax For Individuals In the new tax regime, exemption (rebate) has been raised to the level that individuals having an income of \u20b912 lakh (\u20b912,00,000) per annum need not pay any tax. For salaried taxpayers, because of a base deduction of \u20b975,000, the effective threshold becomes \u20b912.75 lakh. New Tax Slabs Under The New<\/p>\n","protected":false},"author":247,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_bbp_topic_count":0,"_bbp_reply_count":0,"_bbp_total_topic_count":0,"_bbp_total_reply_count":0,"_bbp_voice_count":0,"_bbp_anonymous_reply_count":0,"_bbp_topic_count_hidden":0,"_bbp_reply_count_hidden":0,"_bbp_forum_subforum_count":0,"two_page_speed":[],"_jetpack_memberships_contains_paid_content":false,"_joinchat":[],"footnotes":""},"categories":[96],"tags":[3386],"class_list":{"0":"post-17769","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tax-laws","7":"tag-tax-laws"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/posts\/17769","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/users\/247"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/comments?post=17769"}],"version-history":[{"count":0,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/posts\/17769\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/media?parent=17769"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/categories?post=17769"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalserviceindia.com\/Legal-Articles\/wp-json\/wp\/v2\/tags?post=17769"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}