Updated Tax Rates Applicable to Individuals, HUFs, Firms, Companies and Co-operative Societies for FY 2025-26 & AY 2026-27
The Income-tax framework for Assessment Years 2025–26 and 2026–27 introduces updated slab rates, surcharge rules, cess applicability, and special concessional regimes for various categories of taxpayers. This consolidated guide provides a structured and up-to-date reference of the tax rates applicable to Individuals, HUFs, AOPs, BOIs, Firms, LLPs, Companies, Co-operative Societies, and Local Authorities. It also summarises key provisions relating to AMT, MAT, rebate under Section 87A, and concessional tax regimes under Sections 115BAC, 115BAA, 115BAB, 115BAD, and 115BAE.
The objective of this document is to offer a clear and reliable snapshot of the statutory tax structure as amended by the Finance Act, 2025.
Tax Rates
1. Individuals (Resident or Non-resident), HUFs, AOPs, BOIs, and Other Artificial Juridical Persons
a. Individuals (Other than Resident Senior or Super Senior Citizens)
| Net Income Range | AY 2026–27 | AY 2025–26 |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,000 to ₹5,00,000 | 5% | 5% |
| ₹5,00,000 to ₹10,00,000 | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% |
b. Resident Senior Citizens
(60 years or more but less than 80 years during the previous year)
| Net Income Range | AY 2026–27 | AY 2025–26 |
|---|---|---|
| Up to ₹3,00,000 | Nil | Nil |
| ₹3,00,000 to ₹5,00,000 | 5% | 5% |
| ₹5,00,000 to ₹10,00,000 | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% |
c. Resident Super Senior Citizens
(80 years or more during the previous year)
| Net Income Range | AY 2026–27 | AY 2025–26 |
|---|---|---|
| Up to ₹5,00,000 | Nil | Nil |
| ₹5,00,000 to ₹10,00,000 | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% |
d. Hindu Undivided Family (Including AOPs, BOIs, and Other Artificial Juridical Persons)
| Net Income Range | AY 2025–26 | AY 2024–25 |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,000 to ₹5,00,000 | 5% | 5% |
| ₹5,00,000 to ₹10,00,000 | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% |
Surcharge
Surcharge is levied on the amount of income tax at the following rates when the total income exceeds the specified thresholds:
| Total Income Range | Surcharge Rate |
|---|---|
| ₹50 lakh to ₹1 crore | 10% |
| ₹1 crore to ₹2 crore | 15% |
| ₹2 crore to ₹5 crore | 25% |
| Above ₹5 crore | 37% |
Important Note:
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The higher surcharge rates of 25% and 37% do not apply to:
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Dividend income
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Income taxable under Sections 111A, 112, 112A, and 115AD(1)(b)
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For such incomes, the maximum surcharge is capped at 15%.
(3) Surcharge Exemption for Specified Funds
No surcharge is applicable if the total income of a ‘specified fund’ (as defined under Section 10(4D)) includes income from securities referred to in Section 115AD(1)(a).
Marginal Relief – Conditions and Application
Marginal relief is provided so that the increase in tax liability (including surcharge) is not disproportionately higher than the increase in income. It applies as follows:
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Income above ₹50 lakh and up to ₹1 crore:
The tax plus surcharge should not exceed the tax payable on ₹50 lakh by more than the amount by which the income exceeds ₹50 lakh. -
Income above ₹1 crore and up to ₹2 crore:
The combined tax and surcharge cannot be more than the tax payable on ₹1 crore plus the income exceeding ₹1 crore. -
Income above ₹2 crore and up to ₹5 crore:
Total tax liability (tax + surcharge) shall not exceed the tax on ₹2 crore by more than the additional income above ₹2 crore. -
Income exceeding ₹5 crore:
The tax plus surcharge should not go beyond the tax payable on ₹5 crore by more than the income exceeding ₹5 crore.
b. Health and Education Cess
A cess of 4% is charged on the total of income-tax plus surcharge.
Exceptions:
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No cess is levied on a specified fund (Section 10(4D)) if its income includes securities income covered under Section 115AD(1)(a).
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A resident individual with taxable income up to ₹5,00,000 is eligible for rebate under Section 87A, reducing their income-tax liability (before cess) by 100% of tax or ₹12,500, whichever is lower.
Alternate Minimum Tax (AMT)
AMT applies when the regular tax payable is less than 18.5% of the adjusted total income. In such cases, tax is computed at 18.5% of adjusted total income.
For non-corporate taxpayers who are units in an IFSC and earn solely in foreign exchange, AMT is charged at a reduced rate of 9% (plus applicable cess and surcharge).
1.1 Special Tax Rates for Individuals, HUFs, AOPs, BOIs, and AJPs
Section 115BAC offers an optional lower tax rate regime (now the default regime). To opt for this structure, the taxpayer must forego various deductions and exemptions.
Tax Slabs – Assessment Year 2025–26
Net Income 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% Tax Slabs – Assessment Year 2026–27
Net Income 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%
Additional Tax Components
a. Surcharge
Surcharge is imposed on income-tax based on the total income:
Income Range Surcharge Rate ₹50 lakh – ₹1 crore 10% ₹1 crore – ₹2 crore 15% ₹2 crore – ₹5 crore 25% Above ₹5 crore 37% Notes:
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The 25% surcharge is not applicable to dividend income or incomes taxed under Sections 111A, 112, 112A, and 115AD(1)(b). For such incomes, the surcharge cannot exceed 15%.
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If an AOP has only corporate members, surcharge is capped at 15%.
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Specified funds under Section 10(4D) with eligible securities income have no surcharge.
Marginal Relief under New Regime
Provided similarly as in the old regime:
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Ensures tax + surcharge does not exceed tax on the threshold (₹50 lakh / ₹1 crore / ₹2 crore) by more than the excess income above that threshold.
Health & Education Cess (New Regime)
A cess of 4% is charged on tax plus surcharge, except when the taxpayer is a specified fund covered under Section 115AD(1)(a).
Important Notes
(a) Rebate under Section 87A
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Up to AY 2025–26:
Residents opting for Section 115BAC(1A) and having income up to ₹7,00,000 get a rebate up to ₹25,000. -
From AY 2026–27:
Rebate increased to ₹60,000 for residents with income up to ₹12,00,000 under Section 115BAC(1A).
Rebate cannot exceed the actual tax computed.
(b) Marginal Rebate (AY 2026–27 onwards)
If income slightly exceeds ₹7 lakh or ₹12 lakh (as applicable), rebate is adjusted (marginal relief) so that:
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The tax payable does not exceed the amount by which income exceeds the threshold.
(c) AMT Exemption under New Regime
Taxpayers opting for the new regime under Section 115BAC(1A) are not subject to AMT provisions.
2. Partnership Firm
A partnership firm, including an LLP, is taxed at a flat rate of 30%.
Add-On Taxes
(a) Surcharge
If the total income exceeds ₹1 crore, surcharge is charged at 12% of the income-tax.
However, marginal relief applies so that the total tax plus surcharge does not exceed the tax payable on ₹1 crore by more than the income above ₹1 crore.(b) Health & Education Cess
A cess of 4% is levied on the total of income-tax plus surcharge.Alternate Minimum Tax (AMT)
AMT applies when the regular tax is less than 18.5% of adjusted total income. In such cases, tax is computed at 18.5% on the adjusted total income.
For non-company assessees operating as units in an IFSC and earning exclusively in convertible foreign exchange, AMT is reduced to 9% (plus surcharge and cess).
3. Local Authority
A local authority is taxable at a 30% rate.
Add-On Taxes
(a) Surcharge
If income exceeds ₹1 crore, surcharge at 12% is applied, subject to marginal relief so that tax plus surcharge does not exceed the tax on ₹1 crore by more than the excess income.(b) Health & Education Cess
Cess at 4% is charged on income-tax plus surcharge.Alternate Minimum Tax (AMT)
AMT applies when regular tax is less than 18.5% of adjusted total income, making 18.5% the effective tax rate.
For companies located in an IFSC and earning solely in foreign exchange, AMT is 9%.
4. Domestic Company
The tax rates for domestic companies for AY 2025–26 and 2026–27 are as follows:
Category AY 2026–27 AY 2025–26 Company with turnover ≤ ₹400 crore in the relevant previous year 25% (PY 2023–24) 25% (PY 2022–23) Any other domestic company 30% 30% Add-On Taxes
(a) Surcharge
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7% if total income > ₹1 crore but ≤ ₹10 crore
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12% if income exceeds ₹10 crore
Subject to marginal relief ensuring:-
For income between ₹1–10 crore: tax + surcharge ≤ tax on ₹1 crore + excess income
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For income > ₹10 crore: tax + surcharge ≤ tax on ₹10 crore + excess income
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(b) Health & Education Cess
Cess at 4% on income-tax plus surcharge.Minimum Alternate Tax (MAT)
MAT applies when normal tax is less than 15% of book profit. Tax is then computed at 15% of book profit.
For IFSC units earning exclusively in convertible foreign exchange, MAT rate is 9%.
4.1 Special Tax Rates for Domestic Companies
Certain concessional corporate tax regimes are available:
Section Particulars Tax Rate 115BA Optional scheme for certain manufacturing companies 25% 115BAA Concessional regime without incentives/deductions 22% 115BAB For new manufacturing companies satisfying notified conditions 15% Surcharge & Cess
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For 115BAA and 115BAB, surcharge is a flat 10%, regardless of income level.
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Health & Education Cess applies at 4%.
MAT Applicability
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Companies choosing 115BAA or 115BAB are exempt from MAT.
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MAT continues to apply where 115BA is chosen.
5. Foreign Company
Applicable income-tax rates for AY 2025–26 and 2026–27:
Type of Income Tax Rate Royalty or technical service fees per agreements entered within the eligible historical period (with Central Government approval) 50% All other income 35% Add-On Taxes
(a) Surcharge
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2% when income exceeds ₹1 crore but ≤ ₹10 crore
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5% when income exceeds ₹10 crore
Marginal relief ensures the surcharge does not create a disproportionate tax burden beyond the excess income.
(b) Health & Education Cess
4% cess on income-tax plus surcharge.Minimum Alternate Tax (MAT)
MAT is levied at 15% of book profit, unless the foreign company:
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Has no permanent establishment (PE) in India, or
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Is taxed under presumptive schemes: Sections 44B, 44BB, 44BBA, 44BBB.
In such cases, MAT does not apply.
6. Co-operative Society
Tax slabs for AY 2025–26 and 2026–27:
Taxable Income Rate Up to ₹10,000 10% ₹10,000–₹20,000 20% Above ₹20,000 30% Add-On Taxes
(a) Surcharge
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7% when income > ₹1 crore but ≤ ₹10 crore
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12% when income > ₹10 crore
Subject to marginal relief.
(b) Health & Education Cess
4% on tax plus surcharge.Alternate Minimum Tax (AMT)
AMT at 15% of adjusted total income applies if normal tax is lower.
For IFSC units earning solely in convertible foreign exchange, AMT is 9%.
6.1 Optional Tax Regimes for Co-operative Societies
Co-operatives may opt for concessional regimes subject to eligibility:
Section Key Conditions Tax Rate 115BAE New co-op (registered on/after 01-04-2023), engaged in manufacturing, commenced production before 31-03-2024, and does not claim specified deductions 15% (manufacturing income) 115BAD If the society forgoes specified exemptions/deductions 22% Surcharge & Cess
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Surcharge is 10% flat under both schemes.
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Health and Education Cess at 4% applies.
AMT Exemption
Co-operatives opting for 115BAD or 115BAE are not subject to AMT, and no AMT credit can be computed or carried forward.
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