FY 2026-27 runs from 1 April 2026 to 31 March 2027, and the return for it is filed in assessment year 2027-28. The slab rates are the ones Budget 2025 set for the previous year, carried forward unchanged; what is new is that the year is governed by the Income-tax Act 2025 rather than the 1961 Act. The section numbers you are used to have moved (87A is now section 156, for instance, and we keep a converter table), but the money works out the same.
New regime slabs for FY 2026-27
The new regime is the default. Unless you opt for the old one in your return, these rates apply to every individual and HUF regardless of age. Seven slabs, and the top rate starts at ₹24 lakh.
| Total income (after deductions) | Rate | Tax at the top of the slab |
|---|---|---|
| Up to ₹4,00,000 | Nil | ₹0 |
| ₹4,00,001 to ₹8,00,000 | 5% | ₹20,000 |
| ₹8,00,001 to ₹12,00,000 | 10% | ₹60,000 |
| ₹12,00,001 to ₹16,00,000 | 15% | ₹1,20,000 |
| ₹16,00,001 to ₹20,00,000 | 20% | ₹2,00,000 |
| ₹20,00,001 to ₹24,00,000 | 25% | ₹3,00,000 |
| Above ₹24,00,000 | 30% | ₹3,00,000 + 30% of the excess |
Cumulative figures are before the 87A rebate, surcharge and 4% cess. The third column is the number to keep in your head: ₹60,000 at ₹12 lakh is exactly what the rebate wipes out.
Old regime slabs, with the senior-citizen thresholds
The old regime keeps the three-rate structure it has had for years. Its only concession to age is a higher basic exemption: ₹3 lakh from 60 and ₹5 lakh from 80. Everything else about it is the deductions, which is why it survives at all.
| Total income | Below 60 | 60 to 79 | 80 and above |
|---|---|---|---|
| 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% |
The 87A rebate under the old regime is ₹12,500, available only while total income is within ₹5 lakh, and it has no marginal relief: ₹5,00,001 of income pays the full ₹12,500 plus.
Standard deduction
Salary and pension income gets a flat deduction before the slabs are applied: ₹75,000 under the new regime, ₹50,000 under the old. No bills, no proof, no cap tied to salary size. Family pension gets its own smaller allowance. Business and professional income gets neither, which is why a consultant at ₹12.5 lakh pays tax where an employee at the same figure does not.
The 87A rebate and marginal relief
Under the new regime the rebate is the whole of the slab tax, up to ₹60,000, while total income is within ₹12 lakh. Since the slab tax on exactly ₹12 lakh is ₹60,000, the effect is nil tax for everyone at or below that line.
The proviso just above the line is the part people get wrong. Without it, ₹12,00,001 of income would owe ₹60,000 that ₹12,00,000 does not. Marginal relief fixes that: tax can never exceed the amount by which your income crosses ₹12 lakh.
- Total income ₹12,10,000: slab tax is ₹61,500. Income above ₹12 lakh is ₹10,000. You pay ₹10,000, plus 4% cess, ₹10,400.
- Total income ₹12,50,000: slab tax is ₹67,500. Excess is ₹50,000. You pay ₹50,000 plus cess, ₹52,000.
- The relief runs out where slab tax equals the excess, at about ₹12,70,588. From there the full slab tax applies: ₹12,75,000 pays ₹71,250 plus cess, ₹74,100.
Two limits on the rebate. It is for resident individuals only, not HUFs or non-residents. And it does not extend to income taxed at special rates, so a person with ₹10 lakh of salary and ₹3 lakh of listed-equity gains is not in the nil-tax zone for the gains.
Surcharge and cess
Health and education cess is 4% of the tax after rebate and surcharge, in both regimes, at every income level. Surcharge is a percentage of the tax, not of the income, and it begins only above ₹50 lakh.
| Total income | Old regime | New regime |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| Above ₹50 lakh to ₹1 crore | 10% | 10% |
| Above ₹1 crore to ₹2 crore | 15% | 15% |
| Above ₹2 crore to ₹5 crore | 25% | 25% |
| Above ₹5 crore | 37% | 25% |
Marginal relief applies at each threshold: tax plus surcharge cannot exceed the tax at the threshold plus the income that crosses it. Under the new regime, total income of ₹50,50,000 attracts slab tax of ₹10,95,000 and a nominal 10% surcharge of ₹1,09,500. But tax at exactly ₹50 lakh is ₹10,80,000 and the extra income is only ₹50,000, so the surcharge is cut to ₹35,000; with cess the bill is ₹11,75,200. Dividend and listed-equity gains carry their own 15% ceiling on surcharge, which matters for high-income investors and is outside the simple table above.
Three worked examples
All three use the arithmetic in our income tax calculator: standard deduction, slabs, rebate, surcharge, then cess. Old-regime deductions are shown only where the person actually has them.
1. Salary of ₹9 lakh, no investments
- New regime. Taxable income ₹8,25,000 after the ₹75,000 standard deduction. Slab tax ₹22,500 (₹20,000 on the 5% band and ₹2,500 on the 10% band). Rebate ₹22,500. Tax nil.
- Old regime. Taxable income ₹8,50,000 after the ₹50,000 standard deduction. Slab tax ₹82,500, cess ₹3,300, total ₹85,800. Even with a full ₹1.5 lakh of 80C and ₹25,000 of 80D the old regime still owes ₹49,400.
Below ₹12 lakh there is no deduction stack that beats nil. The new regime wins without a calculation.
2. Salary of ₹18 lakh with HRA, 80C and 80D
A Jaipur employee paying ₹30,000 a month in rent, with an HRA exemption of ₹2,40,000 for the year, ₹1,50,000 of EPF and ELSS under 80C, and a ₹25,000 family health policy under 80D.
- New regime. HRA, 80C and 80D do not exist here. Taxable income ₹17,25,000. Slab tax ₹1,45,000 (₹20,000 + ₹40,000 + ₹60,000 + ₹25,000 on the 20% band). Cess ₹5,800. Total ₹1,50,800.
- Old regime. Salary ₹18,00,000 less HRA exemption ₹2,40,000, standard deduction ₹50,000, 80C ₹1,50,000 and 80D ₹25,000 gives taxable income ₹13,35,000. Slab tax ₹2,13,000 (₹12,500 + ₹1,00,000 + ₹1,00,500). Cess ₹8,520. Total ₹2,21,520.
The new regime is ahead by ₹70,720 despite ₹4.65 lakh of old-regime relief. Add a ₹2 lakh home-loan interest deduction and the old regime comes down to ₹1,59,120, still ₹8,320 behind. At ₹18 lakh the old regime needs roughly ₹7 lakh of exemptions and deductions just to draw level, which is why most salaried people on it should re-run the comparison rather than renew it out of habit.
3. Salary of ₹30 lakh plus ₹5 lakh of capital gains
Total income ₹35 lakh: no surcharge yet, top slab in both regimes. First take the gains as slab-rate income, which is what a short-term gain on property or on debt mutual fund units bought after 1 April 2023 is.
- New regime. Taxable income ₹34,25,000. Slab tax ₹6,07,500 (₹3,00,000 to ₹24 lakh, then 30% of ₹10,25,000). Cess ₹24,300. Total ₹6,31,800.
- Old regime with 80C ₹1,50,000 and 80D ₹25,000. Taxable income ₹32,75,000. Slab tax ₹7,95,000 (₹1,12,500 to ₹10 lakh, then 30% of ₹22,75,000). Cess ₹31,800. Total ₹8,26,800.
If the ₹5 lakh is instead a long-term gain on listed shares, it leaves the slab entirely: the first ₹1.25 lakh is exempt and the remaining ₹3,75,000 is taxed at 12.5%, ₹46,875, in either regime. Slab tax under the new regime on the ₹30 lakh salary alone is ₹4,57,500, so the year closes at ₹5,04,375 plus cess, ₹5,24,550. The calculator now takes 112A and 111A gains in their own fields and adds the special-rate tax on top of the slab tax, with the senior-citizen exemption limits as well, which is exactly what an ITR-2 does.
Choosing, and being allowed to choose
- A salaried person with no business income picks afresh each year in the return. Tell your employer which regime you want in April so TDS follows it; the choice in the return is what finally counts.
- A person with business or professional income who opts out of the new regime gets back in only once, and cannot then leave again. Treat the choice as a multi-year one, and file the opt-out form within the due date.
- Advance tax in four instalments is due once tax after TDS exceeds ₹10,000, in both regimes. Capital gains that arrive mid-year go into the next instalment.
Where we come in
Run both regimes on your own numbers in the income tax calculator, and when the return is due, our ITR filing plans compute both regimes, reconcile the AIS and file under whichever costs less. If you need to know which form goes with which income, that is the next guide.
Frequently asked questions
Did the income tax slabs change for FY 2026-27?
No. The slabs, the ₹75,000 standard deduction and the ₹60,000 rebate under section 87A that Budget 2025 introduced for FY 2025-26 continue unchanged for FY 2026-27 (assessment year 2027-28). What did change is the statute: from 1 April 2026 the Income-tax Act 2025 applies, with the same rates carried into it.
Is income up to ₹12 lakh really tax-free under the new regime?
Yes, for a resident individual whose total income is up to ₹12 lakh. The slab tax on ₹12 lakh is ₹60,000 and the 87A rebate cancels all of it. A salaried person also gets the ₹75,000 standard deduction first, so a salary of ₹12.75 lakh ends with nil tax. Income taxed at special rates, such as listed-equity capital gains, is outside the rebate.
What is marginal relief on the 87A rebate?
If total income is just over ₹12 lakh, the tax payable is capped at the amount by which income exceeds ₹12 lakh. On ₹12.10 lakh the slab tax would be ₹61,500, but you pay only ₹10,000 plus cess, because that is all the income above ₹12 lakh. The relief runs out at roughly ₹12.71 lakh, after which the full slab tax applies.
What is the standard deduction for FY 2026-27?
₹75,000 under the new regime and ₹50,000 under the old regime, available against salary and pension income. It is a flat deduction with no proof required, and it is the only major deduction a salaried person keeps under the new regime apart from the employer NPS contribution under 80CCD(2).
When does surcharge apply, and is it different in the two regimes?
Surcharge starts once total income crosses ₹50 lakh: 10% of the tax above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and 37% above ₹5 crore under the old regime. The new regime caps the top rate at 25%. Marginal relief applies at each threshold so that crossing it never costs more than the extra income earned.
This article is general information, not professional advice. Rates and thresholds are as enacted for FY 2026-27 at the time of writing; confirm the position for your own year and residential status before acting on it.
