Tax rates for Assessment Year 2025-26
Total income of an assessee is taxable either as per applicable normal tax rates or as per special tax rates. The special tax rates have been prescribed in the relevant provisions of the Income-tax Act, while as normal tax rates are prescribed every year under First Schedule of the Finance Act.
In case of Individual/HUF/AOP/BOI/AJP
- General Slab Rates
The normal tax rates has been enumerated in below table:
| Net income range | Resident Super Senior Citizen | Resident Senior Citizen | Any other Individual/HUF/AOP/BOI/AJP |
| Up to Rs. 2,50,000 | Nil | Nil | Nil |
| Rs. 2,50,001- Rs. 3,00,000 | Nil | Nil | 5% |
| Rs. 3,00,001- Rs. 5,00,000 | Nil | 5% | 5% |
| Rs. 5,00,001- Rs. 10,00,000 | 20% | 20% | 20% |
| Above Rs. 10,00,000 | 30% | 30% | 30% |
- Concessional Tax Regimes
Section 115BAC provides for a concessional tax regime for individuals, HUFs, AOPs (other than co-operative societies), BOIs, and AJPs. This provision provides an altogether new tax slab wherein the tax rates have been significantly reduced. However, to avail the benefit of this tax regime, the assessee has to forgo specified exemptions and deductions.
- Rebate under Section 87A
Only resident individuals are eligible to claim rebate under Section 87A. The availability and amount of rebate depend on the tax regime opted for by the assessee.
- Under Normal Tax Regime – A resident individual whose total income does not exceed 5,00,000 is eligible for a rebate of up to Rs. 12,500. The rebate is limited to the amount of tax payable (excluding cess).
- Under New Tax Regime [Section 115BAC(1A)] –
- For Assessment Year 2025–26, a resident individual opting for the new regime is eligible for a rebate of up to 25,000, provided the total income does not exceed Rs. 7,00,000.
- If the total income slightly exceeds 7,00,000, a marginal rebate is available. The rebate equals the excess of tax liability over the income exceeding Rs. 7,00,000. This ensures the additional tax does not surpass the excess income.
- The formula is: Rebate = Tax on total income – (Total income – 7,00,000).
- If the result is negative, no rebate is allowed.
- Alternate Minimum Tax (AMT)
An assessee is liable to pay Alternate Minimum Tax where tax payable by him, on his total income computed as per normal provisions of the Act, is less than 18.5% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as income of such individual and he shall be liable to pay tax at the rate of 18.5% of such ‘adjusted total income’.
If an assessee has opted for new tax regime, the provisions of AMT shall not be applicable. Further, the provisions regarding computation and carry forward of AMT credit shall also be not applicable.
- Surcharge
| Nature of Income | Range of Total Income | ||||
| Up to Rs. 50 lakhs | More than Rs. 50 lakhs but up to Rs. 1 crore | More than Rs. 1 crore but up to Rs. 2 crores | More than Rs. 2 crores but up to Rs. 5 crores | More than Rs. 5 crores | |
| Capital gains covered under Section 111A, 112, 112A or 115AD | Nil | 10% | 15% | 15% | 15% |
| Dividend income (not being dividend income chargeable to tax at special rate under sections 115A, 115AB, 115AC, or 115ACA) | Nil | 10% | 15% | 15% | 15% |
| Unexplained income chargeable to tax under Section 115BBE | 25% | 25% | 25% | 25% | 25% |
| Any other income | Nil | 10% | 15% | 25% | 37%* |
The Finance Act, 2022 has put a cap on the rate of surcharge to 15% in case of an AOP consisting of only companies as its members.
* From the assessment year 2024-25, the surcharge rates on other income for Individuals, HUFs, AOP, BOI or Artificial Juridical Persons opting to pay tax under the new tax regime of Section 115BAC shall not exceed 25%.
- Health & Education Cess
The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
In case of Firm or LLP
- Tax rates
A partnership firm (including LLP) is liable to pay tax at the flat rate of 30% of normal taxable income.
- Alternate Minimum Tax (AMT)
A partnership firm is liable to pay Alternative Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 18.5% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as the income of the firm and it shall be liable to pay tax at the rate of 18.5% of such ‘adjusted total income’.
- Surcharge
The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees.
- Health & Education Cess
The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
In case of Company
- Tax Rates
Income-tax Act allows a domestic company to choose from the following taxation regimes, subject to the fulfilment of prescribed conditions.
| Section | Tax Rates |
| Section 115BA | 25% |
| Section 115BAB | 15%-22% |
| Section 115BAA | 22% |
| First Schedule to Finance Act – total turnover or gross receipts in FY 2022-23 not exceeds Rs. 400 crores | 25% |
| First Schedule to Finance Act – Any other | 30% |
| Foreign Company | 35% |
- Minimum Alternate Tax (MAT)
A company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of ‘book profit’. In such a case the ‘book profit’ is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such ‘book profit’.
The provisions of MAT shall not apply to any income accruing or arising to a company from life insurance business referred to in Section 115B or company exercised the option to pay tax as per Section 115BAA or Section 115BAB. Further, the provisions of MAT do not apply in case of foreign companies if it does not have permanent establishment (PE) in India or opts for presumptive taxation scheme of Section 44B, Section 44BB, Section 44BBA or Section 44BBB.
- Surcharge
| Company | Range of Total Income | ||
| Rs. 1 crore or less | Above Rs. 1 crore but up to Rs. 10 crore | Above Rs. 10 crore | |
| Domestic Company opting for section 115BA | Nil | 7% | 12% |
| Domestic Company opting for section 115BAA | 10% | 10% | 10% |
| Domestic Company opting for section 115BAB | 10% | 10% | 10% |
| Any other domestic company | Nil | 7% | 12% |
| Foreign company | Nil | 2% | 5% |
| Unexplained income chargeable to tax under Section 115BBE | 25% | 25% | 25% |
- Health & Education Cess
The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
In case of local authority
- Tax Rates
A local authority is liable to pay tax at the flat rate of 30% of normal taxable income.
- Alternate Minimum Tax (AMT)
A local authority is liable to pay Alternate Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 18.5% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as the income of local authority and it shall be liable to pay tax at the rate of 18.5% of such ‘adjusted total income’.
- Surcharge
The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees.
- Health & Education Cess
The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
In case of Co-op. Society
- Normal Tax Rates
A co-operative society is liable to pay tax as per the following rates:
| Income range | Tax rates |
| Up to Rs. 10,000 | 10% |
| Rs. 10,000- Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
- Alternate Tax Regime
Income-tax Act allows a co-operative society to choose from the following alternative taxation regime subject to fulfilment of prescribed conditions:
| Section | Tax Rates |
| Section 115BAE | 15%-22% |
| Section 115BAD | 22% |
- Alternate Minimum Tax (AMT)
A co-op. society is liable to pay Alternate Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as the income of co-op. society and it shall be liable to pay tax at the rate of 15% of such ‘adjusted total income’.
If a co-operative society has exercised the option of Section 115BAD or Section 115BAE, the provisions of AMT shall not be applicable. Further, the provisions regarding computation and carry forward of AMT credit shall also be not applicable.
- Surcharge
In the case of co-operative societies (not opting for the alternative tax regime under section 115BAD or 115BAE), the tax calculated on the total income shall be further increased by the surcharge depending upon the total income of the co-operative society. For Assessment Year 2025-26, there are two rates of surcharge – 7% (Total income above Rs. 1 crore but up to Rs. 10 crore) and 12% (Total income above Rs. 10 crore).
In case where a co-operative society is eligible and opt for the alternative tax regime under section 115BAD or 115BAE, the surcharge is levied at a rate of 10% on the amount of income-tax irrespective of the total income of such co-operative society.
- Health & Education Cess
The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
Special Tax Rates under the Income-tax Act
- In case of capital gains
| Section | Assessee | Tax Rate (if transfer before 23-07-2024) | Tax Rate (if transfer on or after 23-07-2024) |
| Section 111A | Any Person | 15% | 20% |
| Section 112 | Any person | 10%-20% | 12.5% |
| Section 112A | Any Person | 10% | 12.5% |
| Section 115AB | Overseas financial organization or offshore funds | 10% | 12.5% |
| Section 115AC | Non-resident | 10% | 12.5% |
| Section 115ACA | Resident Individual | 10% | 12.5% |
| Section 115AD | Foreign Institutional Investors or Specified fund | 10%-30% | 12.5%-30% |
| Section 115E | Non-resident Indian | 10% | 12.5% |
| Section 115BBH | Any Person | 30% | 30% |
- In case of interest income
| Section | Assessee | Tax Rate |
| Section 115A | Non-resident or Foreign Co. | 4%-20% |
| Section 115AC | Non-resident | 10% |
| Section 115AD | Foreign Institutional Investor | 5% |
| Section 115AD | Foreign Institutional Investor | 20% |
| Section 115AD | Specified fund | 10% |
- In case of dividend income
| Section | Assessee | Tax Rate |
| Section 115A | Non-resident or foreign co. | 10%-20% |
| Section 115AC | Non-resident | 10% |
| Section 115ACA | Resident Individual | 10% |
| Section 115AD | Foreign Institutional investor | 20% |
| Section 115AD | Specified fund | 10% |
| Section 115AB | Overseas financial organization or offshore funds | 10% |
- In case of income from securities
| Section | Assessee | Tax Rate |
| Section 115A | Non-resident or Foreign Co. | 20% |
| Section 115AB | Overseas financial organization or offshore funds | 10% |
| Section 115AD | Foreign Institutional investor | 20% |
| Section 115AD | Specified fund | 10% |
| Section 115E | Non-resident Indian | 20% |
- In case of other incomes
| Section | Assessee | Tax Rate |
| Section 115A | Non-resident or Foreign Co. | 20% |
| Section 115B | Assessee engaged in life insurance business | 12.5% |
| Section 115BB | Any person | 30% |
| Section 115BBA | Non-resident sportsman, sport association or entertainer | 20% |
| Section 115BBE | Any person | 60% |
| Section 115BBF | Resident person | 10% |
| Section 115BBG | Any person | 10% |
| Section 115BBH | Any Person | 30% |
| Section 115BBJ | Any Person | 30% |
- In case of trusts or investment funds
| Section | Assessee | Tax Rate |
| Section 115BBC | Any person | 30% |
| Section 115BBI | Trust or institutions | 30% |
| Section 115TD | Trust or institutions | MMR |
| Section 115UA | Business Trust | MMR |
| Section 115UB | Investment fund | 30%-35% or MMR |
| Section 161 | Trust | MMR |
| Section 164 | Private discretionary trust | MMR |
| Section 164A | Oral trust | MMR |
| Section 167B | AOP or BOI | Normal Slab Rate or MMR or Higher rate on income attributable to such member |
Marginal Relief under the Income-tax Act
Marginal relief is allowed when taxable income is beyond the threshold limit after which surcharge is payable, but the net income in excess of the threshold limit is less than the amount of surcharge.
The marginal relief shall be calculated in the following steps:
Step 1: Calculate actual total income (aggregate of normal and special income)
Step 2: Calculate tax on total income and surcharge thereon
Step 3: Calculate deemed total income – The threshold limit prescribed for applicability of relevant rate of surcharge is deemed as total income of an assessee.
Step 4: Calculate tax on deemed total income and surcharge thereon (if any)
Step 5: Find out the difference in income (Step 1 – Step 3)
Step 6: Find out the difference in tax (Step 2 – Step 4)
Step 7: Compute marginal relief (Step 6 – Step 5)
The marginal relief so computed is reduced from the amount of surcharge computed in respect of actual total income.