1. FY 2025-26 Income Tax Slabs (AY 2026-27)
Beginning with the fiscal year (FY) 2025–2026, which translates to the assessment year (AY) 2026–2027, the Indian government made significant adjustments to the income tax slabs under the new tax regime.
These changes are meant to provide tax relief and streamline the tax system for individual taxpayers.

Updated FY 2025–2026 Income Tax Slabs (AY 2026–2025):

Range of Income (₹)                                                         Rate of Taxation (%)
Up to ₹4,000,000                                                                        Nothing
Between 4,00,001 and 8,00,000                                                     5%
8,00,001 to 12,00,000                                                                     10%
12,00,001 to 16,00,000                                                                   15% 
16,00,001 to 20,00,000                                                                    20%
₹20,00,001 to ₹24,000,000                                                              25%
Over ₹24,000,00,000                                                                       30%

In addition, the standard deduction has changed from ₹50,000 to ₹75,000. Anyone making up to ₹12,75,000 will effectively have no tax liability after using the standard deduction thanks to this change. These adjustments are intended to reduce the tax burden on middle-class taxpayers and encourage economic growth by increasing discretionary income. Notably, taxpayers are still allowed to choose between the old and new tax schemes based on their particular financial situation.

For in-depth details and customized advice, it is recommended to consult a tax professional or consult official government publications.

Furthermore, the standard deduction is now ₹75,000 instead of ₹50,000. Because of this improvement, anyone earning up to ₹12,75,000 will essentially have no tax obligation after deducting the standard deduction. 

By raising disposable income, these changes aim to lower the tax burden on middle-class taxpayers and promote economic expansion. Notably, depending on their unique financial circumstances, taxpayers are still free to select between the old and new tax systems.

It is advised to speak with a tax expert or reference official government publications for comprehensive information and tailored guidance.

2. Section 87A Increased Rebate:

The Section 87A rebate’s previous ceiling of ₹25,000 has been increased to ₹60,000. Therefore, taxpayers making up to ₹12 lakh will not be obliged to pay any taxes under the New Tax Regime.

3. Modifications to Tax Deduction at Source (TDS):

The Indian government announced several significant changes to the Tax Deducted at Source (TDS) rules that took effect on April 1, 2025, in an attempt to facilitate compliance and provide relief to taxpayers. Here is a quick rundown of the primary modifications:

1. The introduction of Section 194T: TDS on Payments to Partners.

• Relevance: TDS must now be subtracted from payments made to partners, such as capital interest and compensation, by Limited Liability Partnerships (LLPs) and partnership firms.
• Goal: This solution aligns with other professional payments by guaranteeing tax compliance for income distributed to partners.

2. Reduction of Securitization Trust TDS Rate (Section 194LBC):

TDS rates used to be 25% for individuals and Hindu Undivided Families (HUFs) and 30% for other entities.

• Updated Rate: A uniform TDS rate of 10% is now applied to all payee categories in accordance with the organized structure of the securitization trust sector.

3. Greater TDS Cutoff Points for Varying Income Levels:

• Interest Income: The TDS exemption level for interest received on bank or post office accounts has increased.
• Dividend Income: The TDS threshold for dividend income has increased.
• Insurance Commission: TDS at 5% will now only be withheld if the total amount of insurance commission paid exceeds a higher annual level, as opposed to the previous maximum of ₹15,000.

4. Increased TDS Thresholds for Professional Fees and Commissions:

• Professional Fees/Commissions: Small firms now face less compliance burden thanks to an increase in the TDS exemption level for payments to professionals and commission agents.

5. Higher Rental Income TDS Threshold:

• Rental Income: To help small landlords, the yearly threshold for TDS on rental income has been raised.