Tax Calculation Guide: New Tax Regime FY 2025-26 (Resident Individuals up to ₹1 Cr)
As we step into Financial Year 2025-26, the New Tax Regime has become more attractive than ever. With wider slabs, a higher standard deduction, and a massive jump in the tax-free limit, calculating your tax liability has changed completely.
Whether you are salaried or a business owner, here is your complete guide to calculating tax for income up to ₹1 Crore.
1. The New Tax Slabs (FY 2025-26)
The government has restructured the slabs to lower the burden. Note that the 30% tax rate now kicks in only after ₹24 Lakhs (previously it was much lower).
| Net Taxable Income Range | Tax Rate |
|---|---|
| 0 – ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
2. Key "Tax-Free" Updates
Standard Deduction: Increased to ₹75,000 for salaried individuals (up from ₹50,000).
Rebate u/s 87A: If your Net Taxable Income is up to ₹12 Lakhs, you pay ZERO Tax.
For Salaried: Salary up to ₹12.75 Lakhs (₹12L + ₹75k deduction) is tax-free.
3. Tax Amount for Different Income Levels
Below is the calculated tax liability for a Resident Individual (Salaried) under the New Regime.
A. Middle Income Group (Up to ₹20 Lakhs)
| Gross Salary | Taxable Income | Calculation | Total Tax |
|---|---|---|---|
| ₹12,00,000 | ₹11,25,000 | Income < ₹12L | ₹0 |
| ₹12,75,000 | ₹12,00,000 | Income = ₹12L | ₹0 |
| ₹15,00,000 | ₹14,25,000 | Slabs apply | ₹97,500 |
| ₹20,00,000 | ₹19,25,000 | 5% to 20% slabs | ₹2,39,200 |
B. High Income Group (₹25 Lakhs – ₹1 Crore)
| Gross Salary | Taxable Income | Income Tax | Surcharge | Cess | Final Tax |
|---|---|---|---|---|---|
| ₹25,00,000 | ₹24,25,000 | ₹3,57,500 | Nil | ₹14,300 | ₹3,71,800 |
| ₹40,00,000 | ₹39,25,000 | ₹8,07,500 | Nil | ₹32,300 | ₹8,39,800 |
| ₹50,00,000 | ₹49,25,000 | ₹11,07,500 | Nil | ₹44,300 | ₹11,51,800 |
| ₹75,00,000 | ₹74,25,000 | ₹18,57,500 | ₹1,85,750 | ₹81,730 | ₹21,24,980 |
| ₹1,00,00,000 | ₹99,25,000 | ₹26,07,500 | ₹2,60,750 | ₹1,14,730 | ₹29,82,980 |
4. Understanding the "Surcharge" Twist
The Rule: 10% surcharge applies on tax if income exceeds ₹50 Lakhs.
Marginal Relief: Ensures you do not pay more tax than the additional income earned above ₹50 Lakhs.
- Zero tax up to ₹12 Lakhs taxable income
- 30% rate applies only above ₹24 Lakhs
- 10% surcharge above ₹50 Lakhs
- ₹75,000 standard deduction for salaried
Example A: The Middle-Class Earner
Gross Salary: ₹15,00,000
Less Deduction: ₹75,000
Taxable Income: ₹14,25,000
Tax:
0–4L: Nil
4–8L: ₹20,000
8–12L: ₹40,000
12–14.25L: ₹33,750
Total: ₹97,500
Example B: The High Earner
Gross Salary: ₹60,00,000
Taxable Income: ₹59,25,000
Basic Tax: ₹14,07,500
Surcharge: ₹1,40,750
Cess: ₹61,930
Total Tax: ₹16,10,180
5. Frequently Asked Questions (FAQs)
Q1: Can I claim HRA or 80C?
No, deductions are not allowed in this regime.
Q2: What is Marginal Relief?
Tax is limited to excess income above ₹12 Lakhs.
Q3: Is surcharge mandatory?
No, only above ₹50 Lakhs.
Q4: Do freelancers get ₹75,000 deduction?
No, only salaried & pensioners.
Q5: Can I switch regimes?
Salaried: yearly. Business: once only.
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