New Tax Regime Introduces Revised Perquisite Valuation Thresholds and Slabs from FY 2025-26

The government has unveiled significant changes to the income taxation rules ahead of the financial year 2025-26 that are poised to affect both employees and taxpayers across the country. Under the revamped regime, perquisites (employee benefits) will only be taxable in companies where the employee’s salary is at least ₹4 lakh, and specific exemptions for special perks may apply to those earning below ₹8 lakh, thereby offering relief to a large segment of low-to-mid-income earners. In parallel, the general income tax slab structure under the new regime has been reworked with a higher tax-free threshold: incomes up to ₹4 lakh attract no tax, the next slab of ₹4–8 lakh is taxed at 5%, ₹8–12 lakh at 10%, continuing up to 25% for the ₹20–24 lakh bracket and 30% for incomes above ₹24 lakh. Additionally, the enhanced rebate under Section 87A has been boosted to ₹60,000, meaning individuals earning up to approximately ₹12 lakh may have zero tax liability under the new regime after deductions. These changes are part of a broader initiative announced in the Income‑tax Act, 2025, to simplify the tax code, reduce litigation, and align definitions (such as treating “Tax Year” uniformly instead of the older “Assessment Year/Previous Year”). Overall, while the new rules reduce the immediate tax burden for many middle-income earners and simplify compliance, they also signal a medium-term structural shift toward a leaner tax regime—meaning individuals and businesses will need to recalibrate tax-planning strategies accordingly.