• Two regimes: Old regime (with deductions) and New regime (lower rates, no deductions).
• New regime rebate up to ₹7 lakh, old regime up to ₹5 lakh.
• Defence allowances exempt under old regime, not in new regime.
• Choice depends on deductions and allowances claimed.
• ITR filing via udChalo for defence personnel starts at just ₹499.

Every financial year, the Income Tax Department updates the slab rates, which affect the amount of tax individuals must pay. For defence personnel—whether serving jawans, officers, or pensioners—understanding these slabs is essential to avoid overpayment or penalties. 

This guide explains the latest income tax slabs for AY 2025-26, their impact on personnel of the Army, Navy, and Air Force, and how to choose between the old and new regimes.

The government has introduced two regimes—Old and New. The new regime under Section 115BAC offers lower tax rates but removes most deductions, while the old regime retains deductions and exemptions.

Here are the slab rates for AY 2025-26 under the New Tax Regime:

Defence personnel need to evaluate if the lower tax rates compensate for the loss of deductions like HRA, standard deduction, and allowances.

Under the old regime, slab rates are higher, but they allow deductions and exemptions, such as 80C (PF, LIC), 80D (health insurance), HRA, and transport allowance.

Read More:How to File Belated or Revised ITR for Defence Personnel

Defence allowances such as Field Area Allowance, High Altitude Allowance, Transport Allowance, and pensions for retired personnel play a significant role in deciding which regime is better.

• In the new regime, most of these exemptions are not available.
• In the old regime, these allowances can reduce taxable income substantially.

Example Calculations for Defence Ranks

Example 1: Serving Jawan (Old Regime)

• Basic Pay: ₹6,00,000
• Allowances (HRA, Transport): ₹1,50,000
• Deductions under 80C: ₹1,50,000
• Taxable Income: ₹4,50,000 → Tax after rebate (87A): Nil

Example 2: Same Jawan (New Regime)

• Total Income: ₹7,50,000
• No deductions allowed
• Taxable Income: ₹7,50,000 → Tax: ₹32,500 after rebate if eligible

Observation: For jawans with multiple deductions, the old regime is often better.

Read More: How to Check ITR Refund Status

The new regime is beneficial if:

• You have minimal deductions and want a simple tax structure.
• You earn a higher salary with fewer allowances.

The old regime is better if:

• You claim HRA, standard deduction, 80C, 80D benefits.
• You receive special defence allowances.

For detailed guidance, check our blog on Section 115BAC Explained for Defence Personnel.

If your taxable income is up to ₹7 lakh (new regime) or ₹5 lakh (old regime), you can avail a 100% tax rebate under Section 87A. This means no tax liability for jawans with lower income brackets.

Common Mistakes Defence Personnel Make in Tax Calculation

• Ignoring the rebate under 87A.
• Forgetting to claim defence allowances under the old regime.
• Choosing the wrong regime without comparison.
• Not considering pension income after retirement.

Read More: How is Income Tax Rebate Under Section 87A Calculated?

Selecting the right tax regime is a crucial decision for every defence personnel. If you claim multiple deductions, such as HRA, 80C investments, and allowances, the old regime typically offers better tax benefits. However, for those seeking simplicity with fewer deductions, the new regime under Section 115BAC may be ideal.

Before you file, compare both options carefully to avoid paying extra tax. For expert help at the lowest price, file your ITR with udChalo’s CA-assisted service starting at just ₹499 and enjoy a hassle-free experience.