The New Income Tax Rule – And Here Is What Every Salaried Employee Must Know: A complete guide by K.K & Company

India has a new income tax rule and every working Indian has one big question- “How much is my real take-home salary”? And, the news is- that the government has made some major upgrades that means less deductions and more money in the hands of working Indians. Our Team here at K.K & Company has broken it down for you in a simple language about the new rules. This is the new change which everybody is talking about and especially the employees. Under the new tax regime for financial year 2025-2026, the applicable rebate under section 87A of Income tax has been increased significantly to INR 60,000 for taxable income up to INR 12 lakh. This means that the individual earning 12 lakh is eligible for 100% rebate which means Zero tax liability. Also for the salaried employees, an additional INR 75,000 (standard deduction) will be factored and the threshold extend to INR 12.75 Lakh.

The Big New :

The Tax Regime for financial year 2025-26 & Assessment year 2026-27: India Right now follows two regimes: the old regime which is optional and the new regime which is by default applicable for every one. Here is how the Old and new Slab looks: You can also read about this here. Standard deductions got better for salaried employees from ₹50,000 to ₹75,000 and it is automatically applied under the new tax regime without providing any proof or paperwork.

Real world examples of what the new regime means or how much I’ll save?

So a tax payer earning anything under 12.75 lakh under the new income tax regime will now have zero tax liability.

The Changes

Another most important change for salaried individuals is to have a single Tax Year, which replaces the old concept of having a dual concept of “Previous Year” and “ Assessment year”. Along with this all the ITR forms are optimised and can now effectively auto fill the data using annual Information statements. Which makes your filling easy and convenient. You can also check these forms on the Income tax department website.

Which Regime you should pick

Now, many individuals are confused about the new tax regime and old tax regime as which one to opt for ? A simple thumb rule can be followed here while opting the regimes: As we now know that the new regime offers lower tax slab rates but limits the deduction and exemptions under section 80C (PPF,ELSS,life Insurance), section 80D(health insurance), HRA and LTA. Therefore, If you haven’t invested heavily then opt for the New Regime. Opt for Old regime if you have significant investments and have big clams like home loan interest, 80C, HRA, etc

Next Steps for you

Check all the relevant forms (Income tax form page LINK here), Compare both regimes – using the free tax calculator available on income tax department website or connect with the US. And we can guide and advise you better about both the regimes and exactly where you stand. So that your ITR can be filled on time. You should also check your Annual Information statement AIS, or get it checked for any error before you file your ITR.

Final Take

These changes are genuinely tax payer friendly. A salary under ₹12.75 lakh has zero income tax liability. And, higher earning slabs still saves a meaningful amount. The new income tax Act also makes the filling simpler and more streamlined than before.

Get In touch

If you found this useful and have questions or you need a full tax review, we are here to help. Call us:Cal +91-98270-26540,0731-4065159, 9516052268 Website : https://kkca.in/, Office address: 4, Scheme No.53, Ratanlok Colony, Apollo Premier Service Road, Vijay Nagar Square, Indore (M.P.). Or Simply fill out our contact form (contact form) and a CA from our team will get back to you in 24 hours. This article is prepared by the tax advisory team at K.K & Company for general informational purposes. For advice specific to your financial situation, please consult one of our chartered accountants directly.