**Executive Summary**
This document is an answer to Unstarred Question No. 1546 in Lok Sabha regarding the beneficiaries of income tax limit hikes. The Minister of State in the Ministry of Finance clarifies that income tax slabs and rates were revised by the Finance Act, 2025, applicable for FY 2025-26 onwards for taxpayers filing under the new tax regime. The Act increases the rebate, resulting in no tax for resident individuals with total income up to ₹12,00,000 (₹12,75,000 for salaried individuals with standard deduction).
**Key Points / Main Content**
* **Revised Income Tax Slabs and Rates:**
* The Finance Act, 2025, revised income tax slabs and rates.
* Applicable from FY 2025-26 (Assessment Year 2026-27) onwards.
* Applies to taxpayers filing under section 115BAC(1A) of the Income-tax Act, 1961 (new tax regime).
* Slab rates for AY 2026-27 onwards:
* Up to ₹4,00,000: Nil
* ₹4,00,001 to ₹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 ₹24,00,000: 25%
* Above ₹24,00,000: 30%
* **Increased Rebate:**
* Increased rebate results in no tax for resident individuals with total income up to ₹12,00,000.
* Marginal relief applies for income marginally higher than ₹12,00,000.
* **Salaried Individuals:**
* Standard deduction of ₹75,000 is available.
* No tax if gross total income is up to ₹12,75,000.
* **Impact on Taxpayers:**
* Taxpayers filing under the new tax regime with income above ₹7 lakh are likely to benefit.
* **Government Revenue:**
* Estimated revenue loss of approximately ₹1 lakh crore in direct taxes.
**Impact Analysis**
**Individual Taxpayers:**
* **Impact:** Benefit from revised tax slabs and increased rebate, potentially leading to lower tax liability for those with income above ₹7 lakh and up to ₹12,00,000 (₹12,75,000 for salaried individuals) filing under the new tax regime.
* **Action Required:** Review income and filing options to determine if the new tax regime is beneficial.
**Government:**
* **Impact:** Loss of revenue of approximately ₹1 lakh crore in direct taxes.
* **Action Required:** Account for the revenue decrease and adjust fiscal planning accordingly.
Key Entities Referenced
Finance Act, 2025: Act that revised income tax slabs and rates, providing a rebate for resident individuals under the new regime with income up to ₹ 12,00,000
Section 115BAC(1A) of the Income-tax Act, 1961: Section of the Income-tax Act, 1961, pertaining to the new tax regime under which income tax returns are filed.
Ministry of Finance: The government ministry responsible for answering the question regarding the increase in the income tax exemption limit.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO. 1546
TO BE ANSWERED ON MONDAY, FEBRUARY 9, 2026/ MAGHA 20, 1947 (SAKA)
BENEFICIARIES OF INCOME TAX LIMIT HIKE
1546. DR. MANNA LAL RAWAT:
Will the Minister of FINANCE be pleased to state:
(a) whether the Government has increased the income tax exemption limit in the current
financial year;
(b) if so, the details thereof along with the new limit and the effective date; and
(c) the estimated number of taxpayers likely to be benefited from the increase in the
income tax limit along with its excepted impact on the Government's revenue?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) & (b) The income-tax slabs and rates were revised and considerably made liberal by
the Finance Act, 2025 and they apply in respect of any income for FY 2025-26 and
subsequent financial years for all taxpayers filing Income Tax Returns under the new tax
regime as per section 115BAC(1A) of the Income-tax Act, 1961 (the Act).
Finance Act, 2025 has increased the rebate for the resident individual under the new
regime so that they do not pay tax if their total income is up to ₹ 12,00,000. Marginal relief
as provided earlier under the new tax regime is also applicable for income marginally
higher than ₹ 12,00,000.
For salaried individuals, standard deduction of ₹ 75,000 is available. Therefore, salaried
individuals do not pay tax if their gross total income is up to ₹ 12,75,000.
The details of the slab rates are as follow and apply for AY 2026-27 and onwards:Rate of tax u/s 115BAC of the Act
Total Income (in ₹)
for AY 2026-27 onwards (%)
Up to 4,00,000 Nil
From 4,00,001 to 8,00,000 5
From 8,00,001 to 12,00,000 10
From 12,00,001 to 16,00,000 15
From 16,00,001 to 20,00,000 20
From 20,00,001 to 24,00,000 25
Above 24,00,000 30
The aforesaid slab structure applies to all individuals. Full Rebate is allowed upto an
extent of ₹ 12 lakhs to resident individual. Marginal relief is provided on total income upto
₹ 12,70,588. Thereafter, taxes computed as per the above slabs shall be payable in full.
(c) As slab rates have been modified along with rebate on total income, all taxpayers
filing Income Tax Returns in the new tax regime and having income more than seven
lakh rupees during the financial year 2025-26 are likely to be benefitted from the increase
in the income-tax limit. Further, revenue of about ₹ 1 lakh crore in direct taxes would be
foregone.
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