Table of Contents
Quick answer: For income earned between 1 April 2026 and 31 March 2027, the new tax regime charges nothing up to ₹4 lakh, then 5% to 30% in ₹4 lakh steps, with 30% above ₹24 lakh. Thanks to the rebate and the ₹75,000 standard deduction, a salaried person earning up to ₹12.75 lakh pays no tax at all. The old regime keeps its familiar 5%, 20% and 30% slabs. Union Budget 2026 did not change any slab.
What changed this year
The rates are the same as last year, but the law behind them is new. The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Two things look different as a result:
- “Tax year” replaces “financial year” and “assessment year”. Income earned from 1 April 2026 to 31 March 2027 is “tax year 2026-27”. You will still see FY 2026-27 and AY 2027-28 used for the same period in many places.
- Section numbers have moved. The new regime is now section 202 (it was 115BAC) and the rebate is section 156 (it was 87A). Popular deductions moved too: 80C is now section 123 and 80D is section 126.
The new regime remains the default. If you want the old regime, you have to choose it when you file your return (or by the due date, if you have business income).
New tax regime slabs for FY 2026-27
These apply to everyone under the new regime, whatever their age. There is no separate higher exemption for senior citizens in the new regime.
| Taxable income | Tax rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Two things sit on top of the slabs:
- Standard deduction of ₹75,000 for salaried people and pensioners. It is subtracted from your salary before the slabs apply.
- Rebate of up to ₹60,000 if your taxable income is ₹12 lakh or less. The slab tax on exactly ₹12 lakh works out to ₹60,000, so the rebate wipes it out completely.
Just above ₹12 lakh, marginal relief applies: your tax can’t be more than the amount by which your taxable income exceeds ₹12 lakh. Without it, earning ₹1 more than ₹12 lakh would cost you over ₹60,000 in tax.
Old tax regime slabs for FY 2026-27
The old regime has different exemption limits by age.
| Taxable income | Below 60 | Senior citizen (60 to 79) | Super senior (80+) |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 to ₹3,00,000 | 5% | Nil | Nil |
| ₹3,00,001 to ₹5,00,000 | 5% | 5% | Nil |
| ₹5,00,001 to ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
In the old regime the standard deduction is ₹50,000, and the rebate is up to ₹12,500 if taxable income is ₹5 lakh or less. In exchange for higher rates, you keep deductions such as:
- ₹1.5 lakh for PPF, EPF, ELSS, life insurance premiums, children’s tuition fees and home loan principal (section 123, earlier 80C)
- Health insurance premiums for yourself and your parents (section 126, earlier 80D)
- Up to ₹2 lakh of interest on a home loan for a house you live in
- House rent allowance (HRA) and leave travel allowance (LTA) exemptions
Also read: How is income tax calculated?
Cess and surcharge
A 4% health and education cess is added to your tax in both regimes. All the tax figures in this article include it.
A surcharge applies only to high incomes, on top of the tax:
| Total income | New regime | Old regime |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| ₹50 lakh to ₹1 crore | 10% | 10% |
| ₹1 crore to ₹2 crore | 15% | 15% |
| ₹2 crore to ₹5 crore | 25% | 25% |
| Above ₹5 crore | 25% (capped) | 37% |
The surcharge on capital gains from listed shares and equity mutual funds, and on dividends, is capped at 15%. Marginal relief also applies at each surcharge threshold, so crossing ₹50 lakh by a small amount doesn’t add a large jump in tax.
Tax at common salary levels (new regime)
This table shows the total tax for a salaried person under the new regime with no other income. Each figure includes the ₹75,000 standard deduction, the rebate or marginal relief where it applies, and 4% cess.
| Annual salary | Taxable income | Tax payable | Share of salary |
|---|---|---|---|
| ₹8,00,000 | ₹7,25,000 | ₹0 | 0% |
| ₹10,00,000 | ₹9,25,000 | ₹0 | 0% |
| ₹12,75,000 | ₹12,00,000 | ₹0 | 0% |
| ₹13,00,000 | ₹12,25,000 | ₹26,000 | 2.0% |
| ₹15,00,000 | ₹14,25,000 | ₹97,500 | 6.5% |
| ₹20,00,000 | ₹19,25,000 | ₹1,92,400 | 9.6% |
| ₹25,00,000 | ₹24,25,000 | ₹3,19,800 | 12.8% |
| ₹30,00,000 | ₹29,25,000 | ₹4,75,800 | 15.9% |
| ₹50,00,000 | ₹49,25,000 | ₹10,99,800 | 22.0% |
How the ₹15 lakh figure works: taxable income is ₹15,00,000 − ₹75,000 = ₹14,25,000. Tax is 5% of ₹4 lakh (₹20,000) + 10% of ₹4 lakh (₹40,000) + 15% of ₹2.25 lakh (₹33,750) = ₹93,750. Add 4% cess (₹3,750) and the total is ₹97,500.
The same ₹15 lakh salary under the old regime: suppose you claim ₹2 lakh of deductions (₹1.5 lakh under section 123 and ₹50,000 for health insurance). Taxable income is ₹15,00,000 − ₹50,000 − ₹2,00,000 = ₹12,50,000. Tax is ₹12,500 + ₹1,00,000 + ₹75,000 = ₹1,87,500, plus cess = ₹1,95,000. That is about double the new-regime figure. The old regime only starts to win when your deductions are much larger, typically ₹5 lakh or more at this salary, which usually needs HRA plus a home loan.
Which regime should you pick?
- Salary up to ₹12.75 lakh: the new regime, almost always. You pay zero tax without needing any investments.
- Salary above that, with few deductions: the new regime. Its lower rates beat the old regime unless your deductions are large.
- Large deductions (HRA in a big city, home loan interest, full section 123 investments, health insurance for parents): work out your tax both ways. The old regime can still come out ahead.
Salaried people without business income can choose afresh every year when filing the return. If you have business or professional income, switching back and forth is restricted, so choose carefully.
Also read: House rent allowance (HRA): meaning and taxability
Key dates for tax year 2026-27
- Tell your employer your regime at the start of the year, so the right TDS is deducted from your salary. If you don’t, the employer uses the new regime.
- Advance tax is due in instalments (15 June, 15 September, 15 December and 15 March) if your tax not covered by TDS is ₹10,000 or more.
- Return filing: the usual due date for individuals not needing an audit is 31 July 2027.
FAQs
Is income up to ₹12 lakh tax-free in FY 2026-27?
Yes, under the new regime, if your taxable income is ₹12 lakh or less, the rebate makes your tax zero. For salaried people, the ₹75,000 standard deduction raises this to a salary of ₹12.75 lakh.
Did Budget 2026 change the income tax slabs?
No. Budget 2026 kept both regimes’ slabs, the standard deduction and the rebate exactly as they were for 2025-26. The main change this year is the new Income-tax Act, 2025, which took effect from 1 April 2026.
Do senior citizens get a higher exemption in the new regime?
No. The new regime has the same slabs for all ages. Only the old regime gives senior citizens a ₹3 lakh exemption limit and super senior citizens a ₹5 lakh limit.
What is the difference between FY 2026-27 and tax year 2026-27?
They mean the same period, 1 April 2026 to 31 March 2027. “Tax year” is the term used in the Income-tax Act, 2025. The old system called it the financial year and assessed it in the following “assessment year”.
Does the ₹12 lakh rebate apply to capital gains?
Not fully. Gains taxed at special rates, such as capital gains on listed shares and equity mutual funds, are treated separately. Check the rules for your situation before relying on the rebate to cover them.
This article is for general information only and is not financial advice. Rules, rates and limits change; check the latest details with your bank, insurer or a qualified adviser before deciding.
