Income tax · The Income-tax Act, 2025
Has anything changed for salaried taxpayers under the Income-tax Act, 2025?
Short answer
Very little in substance. For tax year 2026-27 the slabs, the ₹75,000 standard deduction, the ₹12 lakh tax-free limit of the new regime and the choice of regime are unchanged. What changes is the labels: 'tax year' replaces previous and assessment year, Form 16 becomes Form 130, Form 12BB becomes Form 124, and salary TDS moves from section 192 to section 392.
Salary earned from 1 April 2026 (tax year 2026-27) is taxed under the Income-tax Act, 2025. Salary of FY 2025-26, whose return you file now, stays under the 1961 Act.
What stays the same
- Tax rates and slabs under both regimes. New-regime slabs: up to ₹4 lakh nil; ₹4–8 lakh 5%; ₹8–12 lakh 10%; ₹12–16 lakh 15%; ₹16–20 lakh 20%; ₹20–24 lakh 25%; above ₹24 lakh 30%.
- Standard deduction: ₹75,000 in the new regime and ₹50,000 in the old.
- Rebate: income up to ₹12 lakh is tax-free under the new regime (₹12.75 lakh of salary, after the standard deduction).
- The choice of regime: the new regime is the default, and salaried people can still choose either regime each year in the return.
- Deductions in the old regime, such as investments, health insurance, HRA and home-loan interest, with the same limits. One improvement: under the Income-tax Rules, 2026 the 50% HRA limit now also covers Bengaluru, Hyderabad, Pune and Ahmedabad, besides Mumbai, Delhi, Kolkata and Chennai; see HRA.
What changes: the labels
| What | Before (1961 Act) | Now (2025 Act) |
|---|---|---|
| The year | Previous year 2025-26, assessed in AY 2026-27 | Tax year 2026-27 |
| TDS on salary | Section 192 | Section 392 |
| Salary TDS certificate | Form 16 | Form 130 |
| Employee's declaration of claims (HRA, LTA, deductions) | Form 12BB | Form 124 |
| Standard deduction | Section 16(ia) | Section 19 (Table serial 2) |
| Investments deduction | Section 80C | Section 123 |
| Health insurance | Section 80D | Section 126 |
| Employer's NPS contribution | Section 80CCD(2) | Section 124 |
| Rebate | Section 87A | Section 156 |
| New regime | Section 115BAC | Section 202 |
What to do
- Submit Form 124 (not Form 12BB) to your employer with proof of rent, investments and loans, so TDS is right.
- Expect Form 130 (not Form 16) from your employer after the end of tax year 2026-27.
- Tell your employer which regime you want for TDS; you can still change it when you file the return.
- Compare the regimes on your own figures with the income tax calculator, and see old or new regime.
Legal basis
- Sections 19, 123, 126, 156, 202 and 392, Income-tax Act, 2025 (tax year 2026-27 onwards)
- Forms 124 and 130, Income-tax Rules, 2026 (formerly Forms 12BB and 16)
Official sources
Work it out for your own figures with our calculator: Income tax: old vs new.
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