Introduction

Do you sometimes feel that income tax calculations are like solving a tricky puzzle with too many missing pieces? You’re not alone! Every salaried employee—whether working in government or the private sector—struggles to keep up with the latest rules. Thankfully, Budget 2025 has once again simplified things with the Standard Deduction U/s 16(ia). Combine this with automatic income tax preparation software in Excel, and you’ll have a powerful tool to calculate taxes accurately for F.Y.2025-26. Let’s walk through the details together.

Table of Contents

Sr#	Headings
1	What is Standard Deduction U/s 16(ia)?
2	Key Highlights from Budget 2025
3	Standard Deduction Limit for F.Y.2025-26
4	Why is the Standard Deduction Important?
5	Applicability for Government Employees
6	Applicability for Non-Government Employees
7	Difference Between Old and New Regimes
8	How Automatic Income Tax Software in Excel Helps
9	Features of All-in-One Excel Tax Software
10	Using the Software with Form 10E
11	Step-by-Step Example of Tax Calculation
12	Common Mistakes to Avoid in Claiming Deductions
13	Benefits of Filing with Form 10E
14	Comparison of Manual vs. Automated Calculations
15	Conclusion

1. What is Standard Deduction U/s 16(ia)?
The Standard Deduction U/s 16(ia) allows every salaried individual and pensioner to claim a flat deduction. Moreover, it reduces taxable income automatically without requiring any bills or proof. Consequently, employees save time and effort while filing returns. In fact, you can think of it as a discount coupon applied directly to your salary—automatic, simple, and hassle-free.

2. Key Highlights from Budget 2025
The Union Budget 2025 once again emphasised the importance of standard deduction. Furthermore, the Finance Ministry reaffirmed this benefit while introducing other slab-related changes. As a result, crores of employees continue to enjoy a fixed deduction from their salary income. In addition, this move reduces paperwork, creates fairness, and promotes compliance. Above all, it demonstrates the government’s commitment to easing tax burdens.

3. Standard Deduction Limit for F.Y.2025-26
For the financial year 2025-26, the deduction under Section 16(ia) continues at ₹50,000. Therefore, both government and non-government employees can claim it equally. Similarly, pensioners receive the same relief. In other words, this flat deduction promotes equality among taxpayers. Finally, it ensures that everyone gets at least some form of guaranteed benefit.

4. Why is Standard Deduction Important?
The standard deduction matters because it provides instant relief without any paperwork. For example, imagine walking into a store where the cashier reduces your bill by ₹50,000 every single year—without asking questions. Likewise, income tax authorities apply this deduction automatically. Consequently, taxpayers feel less pressure and more confidence during return filing. Most importantly, it makes the tax system easier to understand for ordinary people.

5. Applicability for Government Employees
Government employees, including teachers, clerks, and officers, enjoy direct benefits from this provision. Moreover, the deduction reduces their taxable salary and improves financial relief. On the other hand, it also ensures parity with private-sector employees. Therefore, this flat benefit works as a bridge between different employment categories. Above all, government workers feel assured that they receive equal treatment.

6. Applicability for Non-Government Employees
Non-government employees also claim the same deduction. Whether you work for a multinational company or a small business, the ₹50,000 deduction applies automatically. Consequently, private employees enjoy the same advantages as government staff. In addition, this provision motivates employees to comply with tax rules more easily. Finally, it proves that the system treats all salaried individuals fairly and consistently.

7. Difference Between Old and New Regimes

• Old Regime: You can claim the Standard Deduction along with HRA, 80C, and other exemptions.
• New Regime: Standard Deduction is allowed, but most exemptions are not.
  This flexibility helps taxpayers choose the system that works best for them.

8. How Automatic Income Tax Software in Excel Helps

Manual calculations can be stressful and error-prone. That’s where Automatic Income Tax Preparation Software in Excel steps in. It calculates tax liability in seconds, applying deductions like U/s 16(ia) automatically.

9. Features of All-in-One Excel Tax Software

• User-friendly interface
• Preloaded formulas for deductions and exemptions
• Compatible with both Govt and Non-Govt employees
• Integrated with Form 10E for arrears relief
• Instant tax computation

10. Using the Software with Form 10E

Form 10E is mandatory if you claim relief under Section 89(1) for salary arrears. The Excel software comes with this feature, ensuring compliance without confusion.

11. Step-by-Step Example of Tax Calculation

Let’s say your annual salary is ₹7,00,000.

• Subtract Standard Deduction ₹50,000 = ₹6,50,000
• Apply other eligible deductions like 80C, 80D, etc.
• Software calculates the exact tax liability and reliefs automatically.

12. Common Mistakes to Avoid in Claiming Deductions

• Forgetting to check eligibility under the chosen tax regime
• Not updating salary arrears with Form 10E
• Relying on outdated software without Budget 2025 updates

13. Benefits of Filing with Form 10E

Filing Form 10E avoids unnecessary notices from the Income Tax Department. It ensures your relief claims are valid, particularly when arrears or salary revisions are involved.

14. Comparison of Manual vs. Automated Calculations

• Manual: Time-consuming, prone to mistakes, needs tax knowledge
• Automated Excel Software: Quick, reliable, updated with the latest rules

15. Conclusion

In summary, Standard Deduction U/s 16(ia) for F.Y.2025-26 offers simple yet powerful tax relief to both government and non-government employees. With automatic income tax preparation software all in one in Excel, filing becomes stress-free. Add Form 10E, and you’ve got a complete tax solution—like having a smart assistant who never makes a mistake.

FAQs

1. What is the Standard Deduction U/s 16(ia) for F.Y.2025-26?
   It is a flat deduction of ₹50,000 available to all salaried individuals and pensioners.
2. Is the deduction different for government and non-government employees?
   No, both categories of employees can claim the same amount.
3. Can I claim the Standard Deduction in both Old and New Regimes?
   Yes, but the overall tax benefits vary depending on which regime you choose.
4. Why is Form 10E important for taxpayers?
   Form 10E is required when claiming arrears relief under Section 89(1). It ensures legal compliance.
5. How does Excel-based tax software help?
   It automates tax calculations, applies deductions like Standard Deduction U/s 16(ia), and integrates Form 10E for accurate results.

Download the Automatic Income Tax Calculator All in One in Excel for F.Y.2025-26, designed for both Government and Non-Government Employees with Form 10E.

Features of this Excel Utility are:-

• This Excel Calculator instantly prepares your Tax Computed Sheet as per Budget 2025, ensuring accuracy and saving time.
• Moreover, it includes an inbuilt Salary Structure for both Govt and Non-Govt employees, making it simple to customise.
• It also generates an Automatic Salary Sheet, which reduces manual errors.
• In addition, the tool automatically calculates H.R.A. Exemption U/s 10(13A) with precision.
• Furthermore, it computes Income Tax Arrears Relief U/s 89(1) seamlessly with Form 10E.
• Along with this, the software automatically generates Form 16 Part A and Part B.
• Finally, it prepares the Automatic Income Tax Form 16 Part B, completing the filing process effortlessly.

   

On September 04, 2025 by www.taxexcel.net

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Introduction

Taxes often feel like a puzzle, right? You sit with numbers, receipts, and rules that keep changing. But here’s the good news—Section 115BAC New Tax Regime for FY 2025-26 tries to make things easier by giving you simpler slabs and lower rates. Yes, there’s a catch—you give up most deductions and exemptions. But for many taxpayers, the trade-off works.

In this article, we’ll break down the Income Tax Section 115 BAC for F.Y.2025-26 in plain language. We’ll cover the latest tax slabs, available deductions, exemptions, benefits, and how it compare with the old regime. To make it practical, we’ll also show you how to calculate taxes using an Automatic Income Tax Preparation Excel Software, which makes the process almost effortless.

Let’s dive in!

Table of Contents

Sr#	Headings
1	What is Section 115BAC and Why It Matters?
2	New Tax Regime 2025 – An Overview
3	Tax Slabs Under Section 115BAC for FY 2025-26
4	Tax Slabs for FY 2024-25 (Comparison)
5	Who Can Opt for Section 115BAC?
6	Major Deductions Allowed in the New Regime
7	Exemptions Still Available
8	Deductions & Exemptions Not Allowed
9	Old vs. New Tax Regime: Detailed Comparison
10	Understanding Rebate Under Section 87A
11	Switching Between Old and New Regimes
12	Tax Planning Tips for Section 115BAC
13	Practical Examples – When New Regime Wins
14	Practical Examples – When Old Regime Wins
15	Automatic Income Tax Preparation Excel Software
16	Conclusion
17	FAQs

1. What is Section 115BAC and Why It Matters?

Section 115BAC introduced the New Tax Regime with reduced tax slabs. In return, you need to give up most of your deductions and exemptions. Think of it as choosing between a buffet (old regime with many tax-saving dishes) and a set meal (new regime with fewer choices but lower prices).

The best part? You can decide each year which regime to pick—except in some cases for business income.

2. New Tax Regime 2025 – An Overview

Starting FY 2025-26, the New Regime under Section 115BAC has become the default tax regime. That means if you don’t actively choose the old regime, the system automatically applies the new one.

This regime is particularly attractive for those who don’t have large investments or expenses eligible for deductions. It reduces compliance stress, as you don’t need to track multiple exemption proofs.

3. Tax Slabs Under Section 115BAC for FY 2025-26

Here’s the latest slab structure:

Income Range	Tax Rate
Up to ₹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%

This clearly lowers tax liability for middle-income earners, especially those between ₹8–15 lakh.

4. Tax Slabs for FY 2024-25 (Comparison)

In FY 2024-25, the slabs were slightly different:

Income Range	Tax Rate
Up to ₹3,00,000	Nil
₹3,00,001 – ₹7,00,000	5%
₹7,00,001 – ₹10,00,000	10%
₹10,00,001 – ₹12,00,000	15%
₹12,00,001 – ₹15,00,000	20%
Above ₹15,00,000	30%

The FY 2025-26 update increases the basic exemption to ₹4 lakh and softens the burden across slabs.

5. Who Can Opt for Section 115BAC?

·         Applicable for: Individuals and Hindu Undivided Families (HUFs).

·         Not applicable for: Companies, partnership firms, LLPs.

·         Condition: If you want the old regime, you must opt for it while filing your return.

Business income taxpayers have stricter rules—they need to file Form 10-IEA and can switch back only once.

6. Major Deductions Allowed in the New Regime

Although most deductions vanish, some still remain:

·         Employer’s contribution to NPS under Sec. 80CCD(2) – up to 14% of salary.

·         Additional employee cost deduction (80JJAA).

·         Agniveer Corpus Fund deduction (80CCH).

·         Standard deduction of ₹75,000 for salaried and pensioners.

·         Exemptions on gratuity, leave encashment, and voluntary retirement.

7. Exemptions Still Available

Even under Section 115BAC, you can enjoy:

·         Transport allowance for specially-abled employees.

·         Travel allowance for job-related movement.

·         Daily allowance for duty-related work.

·         Gifts up to ₹50,000.

·         Family pension deduction up to ₹25,000.

8. Deductions & Exemptions Not Allowed

What disappears in the new regime?

·         80C investments (PF, ELSS, Life Insurance).

·         80D health insurance premiums.

·         HRA and LTA.

·         Interest on self-occupied home loan.

·         Professional tax and entertainment allowance.

This makes the regime less attractive for heavy investors and property owners.

9. Old vs. New Tax Regime: Detailed Comparison

Deduction/Exemption	Old Regime	New Regime (115BAC)
80C (PF, ELSS, LIC)	Available	Not Available
HRA	Available	Not Available
Standard Deduction	₹50,000	₹75,000
80D (Health Insurance)	Available	Not Available
Home Loan (Self-occupied)	₹2,00,000	Not Available

Clearly, the new regime benefits those who don’t rely on deductions.

10. Understanding Rebate Under Section 87A

For FY 2025-26:

·         If taxable income ≤ ₹7 lakh → Rebate ₹25,000.

·         If taxable income ≤ ₹5 lakh (old regime) → Rebate ₹12,500.

·         New regime 2025-26 expands rebate to ₹60,000, making it more attractive for low-income earners.

11. Switching Between Old and New Regimes

·         Salaried employees: Can switch every year while filing ITR.

·         Business income taxpayers: Can switch only once in their lifetime back to the new regime after opting out.

So, salaried individuals enjoy more flexibility.

12. Tax Planning Tips for Section 115BAC

·         Compare both regimes before finalising.

·         If you claim fewer deductions → New regime suits you.

·         If you invest heavily (insurance, PF, ELSS, NPS) → Old regime saves more.

·         Use an Excel-based Income Tax Software to calculate accurately.

13. Practical Examples – When New Regime Wins

Example: Salary = ₹12.5 lakh, low deductions.

·         Old regime tax = ₹1,31,851

·         New regime tax = ₹79,300

Savings: ₹52,551 under Section 115BAC.

14. Practical Examples – When Old Regime Wins

Example: Salary = ₹10 lakh, with HRA + Health Insurance deductions.

·         Old regime tax = ₹49,941

·         New regime tax = ₹44,200

Here, old regime saves ₹5,741, making it more beneficial.

15. Conclusion

The Income Tax Section 115 BAC for F.Y.2025-26 offers relief through simpler slabs and reduced rates. It’s best for those who don’t claim many deductions. On the other hand, the old regime still shines if you maximize exemptions and investments.

The smart move? Compare both regimes each year and pick the one that minimizes your tax liability. And don’t forget—using an Automatic Excel Tax Calculator makes the job faster and error-free.

16. FAQs

Q1. What is Section 115BAC in simple terms?
Section 115BAC gives taxpayers the option to pay lower taxes under the new regime but without most deductions and exemptions.

Q2. Can I switch between old and new regimes every year?
Yes, salaried individuals can switch every year, but those with business income have restrictions.

Q3. What is the rebate under Section 115BAC for FY 2025-26?
Individuals with income up to ₹7 lakh get up to ₹60,000 rebate under the new regime.

Q4. Is HRA allowed in the new tax regime?
No, HRA is not available under Section 115BAC.

Q5. How does Excel-based tax preparation software help?
It automates tax computation, HRA exemption, arrears relief, and Form 16 generation—saving both time and mistakes.

Download Automatic Income Tax Preparation Excel Software for theF.Y.2025-26 as per Budget 2025-26

To save time and errors, you can use Automatic Excel-based Tax Software.

Features include:

·         Auto Tax Computation as per Budget 2025.

·         Inbuilt Salary Structures (Govt & Non-Govt).

·         Automatic Salary Sheet generation.

·         Auto HRA Exemption under Sec. 10(13A).

·         Income Tax Arrears Relief U/s 89(1) with Form 10E.

·         Automatic Form 16 (Part A & B).

This tool is like a tax calculator on steroids, simplifying everything for salaried employees.

Download Automatic Income Tax Preparation Excel Software for F.Y. 2025-26 as per Budget 2025-26

To save valuable time and avoid costly errors, simply use the Automatic Excel-based Tax Software. Moreover, this tool not only calculates taxes but also streamlines the entire process.

Key features include:

·         It automatically computes tax as per Budget 2025.

·         It provides inbuilt salary structures for both Government and Non-Government employees.

·         It generates salary sheets instantly without manual effort.

·         It calculates HRA exemptions automatically under Section 10(13A).

·         It prepares arrears relief calculations under Section 89(1) along with Form 10E.

·         It creates Form 16 (Part A & Part B) automatically.

In short, this software acts like a power-packed tax calculator on steroids, and therefore, it makes tax preparation effortless for salaried employees.

First of all, filing taxes can feel overwhelming when you try to manage everything manually. However, with the Automatic Excel-based Tax Software, you can complete the process quickly and accurately. Instead of wasting hours on calculations, you simply enter your details and let the tool do the rest.

Secondly, the software works as per Section 115BAC New Tax Regime for F.Y. 2025- 26   Which means you always stay updated with the latest rules. Whether you belong to the Government sector or the Non-Government sector, the inbuilt salary structure makes it easy to fit your income into the right tax brackets.

How Does It Simplify Your Work?

·         Instead of calculating manually, the tool automatically computes your tax liability as per the latest Budget 2025.

·         Rather than preparing multiple sheets, you instantly generate an automatic salary sheet in just a few clicks.

·         Moreover, you no longer need to worry about missing exemptions—because the software calculates HRA exemptions under Section 10(13A) for you.

·         Additionally, if you have arrears, the software prepares relief under Section 89(1) along with Form 10E automatically.

·         Finally, when you finish your calculations, the tool creates Form 16 (Part A & B) without any extra effort.

A Game-Changer for Salaried Employees

In conclusion, this software doesn’t just help—it transforms how you file taxes. Think of it as having a personal tax assistant in Excel format. By combining accuracy with automation, it reduces stress, saves time, and ensures you never miss out on essential compliance requirements.

So, if you want to stay stress-free this year, download the Automatic Income Tax Preparation Excel Software for F.Y. 2025-26 and experience how simple tax filing can become.

On September 03, 2025 by www.taxexcel.net

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Introduction

Tax planning often feels overwhelming, right? However, every salaried person constantly looks for legitimate ways to reduce taxable income while staying compliant with the Income Tax Act. Among several deductions, Section 80TTA stands out as a small yet effective benefit. It allows you to claim an exemption on savings account interest, directly lowering your tax liability.

Meanwhile, preparing taxes manually usually leads to stress and errors. Fortunately, the Automatic Income Tax Preparation Software All-in-One in Excel for F.Y.2025-26 simplifies everything. With this tool, you save time, ensure accuracy, and claim deductions such as 80TTA effortlessly.

Understanding Section 80TTA

Section 80TTA, introduced under the Income Tax Act, provides relief on savings account interest.

• Eligibility: Individuals and Hindu Undivided Families (HUFs) qualify for this deduction.
• Maximum Limit: You can claim up to ₹10,000 per financial year.
• Applicable Accounts: Savings accounts with banks, post offices, and co-operative banks.

Applicability for F.Y.2025-26

As per the Budget 2025, Section 80TTA continues to apply. Salaried persons and HUFs may claim up to ₹10,000 on savings account interest. However, senior citizens cannot use this section because they must claim under Section 80TTB, which offers higher deductions.

Benefits of Section 80TTA

You should care about 80TTA because:

1. It directly reduces taxable income.
2. It promotes savings as a financial habit.
3. It provides relief, especially for those with modest earnings.

Exclusions under Section 80TTA

Not all interest qualifies. Therefore, you cannot claim deductions for:

• Fixed deposit (FD) interest
• Recurring deposit (RD) interest
• Corporate bond or debenture interest
• Senior citizen claims (covered under Section 80TTB)

Practical Example of 80TTA Calculation

Assume you earned ₹14,000 interest from savings accounts in F.Y.2025-26.

• Eligible deduction: ₹10,000 (under 80TTA)
• Taxable portion: ₹4,000

Thus, instead of paying tax on ₹14,000, you only pay on ₹4,000. Although this deduction looks small, it creates a big difference when you combine it with other exemptions.

Role of Automatic Income Tax Preparation Software

Manual tax calculations often cause mistakes. Conversely, Excel-based All-in-One Tax Software ensures accuracy. With this tool, you can:

• Generate salary sheets automatically
• Calculate HRA exemptions instantly
• Incorporate deductions like 80TTA automatically
• Prepare ready-to-file tax computation sheets

Features of All-in-One Excel Software

This Excel software suits non-government employees perfectly. Moreover, it offers:

• Pre-built salary structures
• Automatic HRA exemption under Section 10(13A)
• Auto-prepared Form 10E for arrears relief (Section 89(1))
• A consolidated tax computation sheet

Step-by-Step Guide to Using Excel Tax Software

Follow these steps to prepare your taxes easily:

1. Download the Excel Tool from the below given link.
2. Enter salary details by inputting your pay structure.
3. Add savings account interest for the year.
4. Apply Section 80TTA exemption; the tool auto-deducts ₹10,000.
5. Review the tax sheet to see your revised liability.

In this way, you minimise errors and save valuable time.

Common Mistakes Taxpayers Make

You should avoid these mistakes to ensure smooth tax filing:

• Skipping savings account interest reporting.
• Claiming deductions meant for senior citizens under 80TTB.
• Exceeding the ₹10,000 cap.

Importance of Claiming 80TTA Properly

If you fail to claim correctly, you may receive income tax notices. Therefore:

• Collect yearly interest certificates from banks.
• Maintain records for future reference.
• Ensure deductions are applied only once across all accounts.

Comparison with Other Deductions

Section 80TTA works well with deductions like 80C (PF, LIC, ELSS) and 80D (health insurance). Unlike 80C, which requires specific investments, 80TTA applies automatically since your savings account already qualifies.

Conclusion

Section 80TTA may appear small, but it plays a significant role in reducing taxable income. By combining it with other deductions, you can lower your liability substantially. Thanks to the Automatic Income Tax Preparation Software All-in-One in Excel for F.Y.2025-26, claiming this deduction has never been easier.

Smart tax planning isn’t only about big deductions—it’s about not missing the small ones. So, use Section 80TTA wisely and let Excel software handle the heavy lifting.

FAQs

Q1. Who can claim a deduction under Section 80TTA?
Individuals below 60 years and HUFs with savings account interest can claim it.

Q2. Can NRIs claim 80TTA benefits?
Yes, NRIs with savings accounts in Indian banks qualify.

Q3. What is the maximum deduction limit?
The limit is ₹10,000 per financial year.

Q4. Does 80TTA apply to joint accounts?
Yes, but each holder must claim proportionately.

Q5. What is the difference between 80TTA and 80TTB?
80TTA applies to individuals and HUFs below 60 with a ₹10,000 limit, whereas 80TTB applies to senior citizens with a higher ₹50,000 limit.

👉 Download the Automatic Income Tax Calculator All-in-One for Non-Government Employees in Excel for the F.Y.2025-26 and enjoy these powerful features:

  

• Firstly, this Excel Calculator prepares your Tax Computed Sheet as per Budget 2025.
• Moreover, it includes an inbuilt salary structure for non-government employees.
• In addition, it generates an automatic salary sheet for simple record-keeping.
• Furthermore, it calculates H.R.A. exemption U/s 10(13A) instantly.
• Next, it automatically prepares Income Tax Form 12BA without mistakes.
• Also, it generates Automatic Form 16 Part A and B for compliance.
• Finally, it prepares the Automatic Income Tax Form 16 Part B, making filing smooth.

On September 02, 2025 by www.taxexcel.net

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The Union Budget 2025, presented on 01 February 2025, introduced significant updates to the new tax regime under Section 115BAC. The changes primarily target salaried taxpayers, professionals, and high-income individuals, making tax planning simpler yet effective. With the help of the Automatic Income Tax Preparation Software All-in-One in Excel for FY 2025-26, taxpayers can calculate and manage their liabilities seamlessly. Below, we provide a comprehensive guide on exemptions, deductions, tax slabs, and the latest provisions announced in Budget 2025.

What is the New Tax Regime for FY 2025-26 (AY 2026-27)?

The new tax regime, introduced in Budget 2020, offered lower tax rates but restricted exemptions and deductions. With the Union Budget 2025, the government enhanced its scope, making it more attractive for taxpayers. For FY 2025-26, the following income tax slabs apply:

Income Range (₹)	Tax Rate (%)
0 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%

Under this structure, income up to ₹4 lakh remains tax-free, and the highest marginal rate of 30% applies to income above ₹24 lakh.

Standard Deduction and Default Tax Regime

The government announced that the new tax regime is the default choice for salary withholding and tax calculations. Key highlights include:

• Salaried individuals can claim a standard deduction of ₹75,000, offering relief and effectively increasing the tax-free threshold to ₹12.75 lakh.
• Family pensioners can claim a standard deduction of ₹25,000, which was raised from ₹15,000 earlier.
• Taxpayers preferring deductions and exemptions of the old regime must opt for it explicitly.

Comparison of the New Tax Regime vs the Previous Year

FY / AY	Income Range (₹)	Tax Rate (%)	Rebate Limit (₹)
FY 2024-25 / AY 2025-26	0–3,00,000	Nil	7,00,000
	3,00,001–7,00,000	5%
	7,00,001–10,00,000	10%
	10,00,001–12,00,000	15%
	12,00,001–15,00,000	20%
	Above 15,00,000	30%
FY 2025-26 / AY 2026-27	0–4,00,000	Nil	12,00,000
	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%

Major Highlights of Exemptions and Benefits in Budget 2025

1. Increase in Tax Rebate Limit

The tax rebate under Section 87A increased to ₹12 lakh, providing complete tax relief for individuals earning up to ₹12.75 lakh (after standard deduction). This ensures zero tax liability for a large portion of the salaried middle class.

2. Increase in Basic Exemption Limit

The basic exemption limit rose from ₹3 lakh (FY 2024-25) to ₹4 lakh in FY 2025-26, offering additional relief to all taxpayers.

3. Section 80TTB Deductions and Standard Deductions

• Salaried individuals continue to enjoy a ₹75,000 standard deduction.
• Family pensioners can now claim a ₹25,000 deduction.
• No changes were made to other standard deductions.

4. Lower Surcharge for High-Income Earners

The surcharge on ultra-high incomes has been rationalised:

• Income above ₹5 crore, previously taxed at 37%, now attracts only 25% surcharge.
• This significantly reduces the effective tax rate for the wealthy.

5. Default Applicability of New Tax Regime

Employers will now deduct TDS under the new tax regime by default. However, employees can opt for the old regime by filing a declaration.

Exemptions and Deductions Not Allowed in the New Tax Regime

While the new regime simplifies tax filing, it removes most exemptions. Taxpayers cannot claim:

• HRA, LTA, and Professional Tax.
• Deductions under Section 80C, 80D, 80E, 80G, 80CCD(1B), etc.
• Interest on home loans for self-occupied properties.
• Special allowances like education allowance, helper allowance, and minor child income allowance.

Exemptions Available in the New Tax Regime

Certain specific exemptions and deductions remain available:

• Transport allowance for PwDs.
• Employer’s contribution to NPS under Section 80CCD(2).
• Leave encashment under Section 10(10AA).
• Gratuity under Section 10(10).
• VRS compensation under Section 10(10C).
• Interest on let-out property under Section 24.
• Family pension deduction under Section 57(iia).
• Deposits in Agniveer Corpus Fund under Section 80CCH(2).

 

Tax Savings Under the New Regime: Salary-Wise Comparison

Annual Salary	Tax Payable (Old Regime)	Tax Payable (New Regime)	Savings
₹5,00,000	₹0*	₹0*	—
₹7,00,000	₹44,200	₹0*	₹44,200
₹10,00,000	₹1,06,600	₹0*	₹1,06,600
₹12,00,000	₹1,63,800	₹0*	₹1,63,800
₹15,00,000	₹2,57,400	₹97,500	₹1,59,900
₹18,00,000	₹3,51,000	₹1,05,800	₹2,00,200
₹20,00,000	₹4,13,400	₹1,92,400	₹2,21,000
₹24,00,000	₹5,38,200	₹2,92,500	₹2,45,700
₹26,00,000	₹6,00,600	₹3,51,000	₹2,49,600

*Rebate under Section 87A applies up to ₹12 lakh.

Which Regime is Better – Old vs New?

• Choose Old Regime if:
  You have large deductions like HRA, 80C investments, medical insurance, and housing loan interest.
• Choose New Regime if:
  • You want a simplified structure without paperwork.
  • Your deductions are small (< ₹2–3 lakh).
  • Your income is up to ₹12.75 lakh (zero tax payable).

Conclusion

The Union Budget 2025 has made the new tax regime highly favourable for a large section of salaried and middle-income taxpayers. With higher exemption limits, enhanced rebates, and simplified compliance, individuals can benefit significantly. However, taxpayers must still compare both regimes before filing returns to ensure maximum tax savings. Tools like the Automatic Income Tax Preparation Software All-in-One in Excel for FY 2025-26 provide accurate and quick calculations, empowering taxpayers to make the right choice.

Download Automatic Income Tax Preparation Software All-in-One in Excel for FY 2025-26

To simplify compliance, the Automatic Excel-Based Income Tax Calculator helps taxpayers compute liabilities instantly. Key features include:

• Instant tax computation as per the Budget 2025 rules.
• An inbuilt salary structure for both Government and Non-Government employees.
• Automatic generation of Salary Sheet.
• HRA exemption calculation U/s 10(13A).
• Arrears Relief calculation U/s 89(1) with Form 10E.
• Automatic Form 16 (Part A & B)
• Excel-based Form 16 Part B preparation.

This makes it a one-stop solution for tax filing and compliance in FY 2025-26.

   

 

On September 01, 2025 by www.taxexcel.net

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