India got a new Income Tax Act in 2025. It replaced a law that had been patched and amended for over six decades. The core tax policy has not changed, but the structure and section numbers have been reorganised.
The new income tax slab tells you the rate. Section 11 of the Income Tax Act, 2025 tells you what does not even get counted. Understanding both is where real tax planning happens.
The New Income Tax Slab
The new regime is the default from FY 2026-27 onwards. Unless you actively opt for the old regime, this is what applies.
| Taxable Income | Tax Rate |
| Up to ₹4 lakh | Nil |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
4% health and education cess applies on total tax. Individuals with taxable income up to ₹12 lakh effectively pay zero tax due to the rebate under Section 157 of the new Act. For salaried individuals, this extends to ₹12.75 lakh after the ₹75,000 standard deduction.
The slabs are lower than the old regime. But the old regime allowed deductions that could significantly reduce taxable income before these rates even applied. The new regime offers fewer deductions, which is exactly why knowing what Section 11 exempts becomes useful.
What Is Section 11
Section 11 is the new Act’s equivalent of Section 10 in the 1961 Act. It covers incomes not included in total income for tax purposes.
These are amounts you earn or receive that do not get added to taxable income at all. They are excluded before slab rates are even applied. The detailed exemptions sit across five schedules: Schedules II through VI.
Key Exemptions Under Section 11
- Agricultural Income: Fully exempt. No cap, no conditions.
- Life Insurance Maturity Proceeds: Maturity amount including bonuses is exempt, subject to premium-to-sum-assured ratio conditions. Death benefit paid to nominees is fully exempt without any conditions. Policies with annual premiums above ₹2.5 lakh are taxed as capital gains on maturity.
- Provident Fund Withdrawals: EPF and PPF withdrawals are exempt on retirement or closure. Interest on EPF contributions above ₹2.5 lakh per year is taxable.
- NPS Payouts: 60% of corpus withdrawn as lump sum at retirement is tax-free. The remaining 40% must go into an annuity, and that annuity income is taxable at slab rates.
- Scholarships: Amounts received for education costs are fully exempt, with no upper limit.
- HUF Member Receipts: Any amount received by an individual as a member of a Hindu Undivided Family is exempt.
How Section 11 and the New Income Tax Slab Work Together
Tax planning under the new regime has two layers.
Layer 1: Remove what Section 11 exempts
Before slab rates apply, certain incomes never enter the calculation. Insurance maturity amounts, PF withdrawals at retirement, NPS lump sum, these are carved out entirely. Most people skip this layer and jump straight to deductions.
Layer 2: Apply the slab on what remains
After Section 11 exemptions, what is left is taxable income. This is what the new income tax slab rates hit.
A quick example: someone retires with ₹30 lakh from EPF, ₹20 lakh as insurance maturity, and ₹15 lakh in other annual income. EPF and insurance amounts are excluded under Section 11. Only ₹15 lakh enters the slab, not ₹65 lakh.
Practical Tax Planning Tips
Check Section 11 receipts before calculating tax
List all receipts for the year first. Separate what qualifies under Section 11 from what does not. Many people over-report taxable income simply by not checking what is excluded.
Verify conditions on insurance policies
If the premium paid in any year exceeds the prescribed percentage of the sum assured, the maturity amount loses its exemption. Check policy documents before assuming proceeds are tax-free.
Watch EPF contributions above ₹2.5 lakh
Interest on the excess becomes taxable. High-income employees who contribute beyond this threshold need to factor it into their annual income calculation.
Do not assume all NPS withdrawals are exempt
The 60% lump sum is exempt. The annuity income from the remaining 40% is fully taxable at the applicable slab rate.
Run old vs new regime with actual numbers
The new income tax slab has lower rates but fewer deductions. For someone with substantial 80C investments, HRA, and home loan interest, the old regime might result in lower total tax despite higher slab rates. The difference is not always obvious from the slabs alone, run both through a calculator.
Section 11 exemptions apply in both regimes
This matters. PF, insurance maturity, NPS lump sum, agricultural income, these are excluded before either regime’s rules apply. They are income exclusions, not deductions. Available regardless of which regime you are on.
What Changed vs the Old Act
For individuals, the shift to the Income Tax Act, 2025 is mostly structural. Section 80C is now Section 123. Section 80D is Section 124. But deduction limits and exemption amounts remain unchanged.
Section 10 of the 1961 Act becoming Section 11 in the new Act does not reduce any existing exemption. Agricultural income is still fully exempt. Insurance proceeds follow the same conditions. PF withdrawals work the same way. The reorganisation makes the law easier to read, nothing has been taken away.
Bottom Line
The new income tax slab sets the rate. Section 11 determines how much income actually reaches that calculation.
Identifying what is excluded under Section 11 before applying slab rates to the rest is the basic structure of tax planning under the Income Tax Act, 2025. Miss that first step and you will likely pay more tax than you actually owe.
Most people spend time choosing between old and new regime but skip the more important question, what part of their income is taxable in the first place. Get that right, then pick the regime. That order matters more than most guides let on.
