For FY 2026-27, the new tax regime slabs are: nil up to Rs 4 lakh, 5% for Rs 4-8 lakh, 10% for Rs 8-12 lakh, 15% for Rs 12-16 lakh, 20% for Rs 16-20 lakh, 25% for Rs 20-24 lakh and 30% above Rs 24 lakh. A rebate of up to Rs 60,000 means no tax on income up to Rs 12 lakh, and salaried people also get a Rs 75,000 standard deduction, so salary up to Rs 12.75 lakh is tax-free. The old regime slabs are unchanged at nil up to Rs 2.5 lakh, 5%, 20% and 30%.
Budget 2026-27 left personal income tax slabs unchanged, so the rates introduced in Budget 2025 continue for the financial year 1 April 2026 to 31 March 2027. What did change is the law itself. The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026, and it uses a single ‘tax year’ in place of the old pairing of previous year and assessment year. This guide gives you both regimes, the rebate, a set of worked examples, and tips on choosing the right regime.
New tax regime slabs for FY 2026-27
| Taxable income | Tax rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 to Rs 8,00,000 | 5% |
| Rs 8,00,001 to Rs 12,00,000 | 10% |
| Rs 12,00,001 to Rs 16,00,000 | 15% |
| Rs 16,00,001 to Rs 20,00,000 | 20% |
| Rs 20,00,001 to Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
The new regime is the default. If you do nothing, your employer deducts TDS and your return is processed under it.
Old tax regime slabs for FY 2026-27
| Taxable income | Below 60 years | Senior citizen (60 to 79) | Super senior (80+) |
|---|---|---|---|
| Up to Rs 2,50,000 | Nil | Nil | Nil |
| Rs 2,50,001 to Rs 3,00,000 | 5% | Nil | Nil |
| Rs 3,00,001 to Rs 5,00,000 | 5% | 5% | Nil |
| Rs 5,00,001 to Rs 10,00,000 | 20% | 20% | 20% |
| Above Rs 10,00,000 | 30% | 30% | 30% |
Rebate: why income up to Rs 12 lakh is tax-free
Under the new regime, a resident individual whose taxable income does not exceed Rs 12 lakh gets a rebate of up to Rs 60,000, which wipes out the tax. Add the Rs 75,000 standard deduction for salaried people and pensioners, and a salary of up to Rs 12.75 lakh attracts no tax. If your income is slightly above Rs 12 lakh, marginal relief ensures the tax you pay is not more than the amount by which your income exceeds Rs 12 lakh.
The rebate does not apply to income taxed at special rates, such as short-term and long-term capital gains on listed shares and equity mutual funds. Under the old regime, the rebate is up to Rs 12,500 for taxable income up to Rs 5 lakh.
Standard deduction and other deductions
| Item | New regime | Old regime |
|---|---|---|
| Standard deduction (salary or pension) | Rs 75,000 | Rs 50,000 |
| Family pension deduction | Rs 25,000 | Rs 15,000 |
| 80C (PPF, ELSS, life insurance, EPF, home loan principal) | Not allowed | Up to Rs 1.5 lakh |
| 80D health insurance | Not allowed | Up to Rs 25,000 (Rs 50,000 for seniors) |
| HRA exemption | Not allowed | Allowed |
| Home loan interest on self-occupied house | Not allowed | Up to Rs 2 lakh |
| Employer NPS contribution | Up to 14% of basic plus DA | Up to 10% of basic plus DA |
Surcharge and cess
- Health and education cess of 4% applies on the tax plus surcharge in both regimes.
- Surcharge: 10% for income above Rs 50 lakh up to Rs 1 crore, 15% above Rs 1 crore up to Rs 2 crore, 25% above Rs 2 crore. Above Rs 5 crore, the rate is 37% in the old regime and remains capped at 25% in the new regime.
Worked examples under the new regime
| Gross salary | Taxable after Rs 75,000 deduction | Tax payable (with cess) |
|---|---|---|
| Rs 10,00,000 | Rs 9,25,000 | Nil (rebate) |
| Rs 12,75,000 | Rs 12,00,000 | Nil (rebate) |
| Rs 15,00,000 | Rs 14,25,000 | Rs 97,500 |
| Rs 20,00,000 | Rs 19,25,000 | Rs 1,92,400 |
| Rs 30,00,000 | Rs 29,25,000 | Rs 4,75,800 |
How the Rs 15 lakh figure works: on Rs 14.25 lakh, tax is Rs 20,000 (5% of Rs 4 lakh) plus Rs 40,000 (10% of Rs 4 lakh) plus Rs 33,750 (15% of Rs 2.25 lakh) = Rs 93,750, plus 4% cess = Rs 97,500. For the Rs 20 lakh and Rs 30 lakh rows the same slab-by-slab method applies. Figures are rounded and assume no other income. Use the Income Tax Department’s calculator to check your own case.
Which regime should you choose?
The new regime is better for most people whose deductions are small. The old regime can still win if you claim large deductions, typically a mix of full 80C (Rs 1.5 lakh), health insurance, HRA in a big city and home loan interest. A rough rule of thumb: at an income of around Rs 15 to 20 lakh, you usually need total deductions (other than standard deduction) of well over Rs 4 lakh for the old regime to be cheaper. Run both calculations before deciding.
- Salaried people can choose a regime every year when filing the return, and tell the employer at the start of the year for TDS.
- People with business or professional income can switch from the new to the old regime only once in their lifetime, apart from one switch back.
What the Income-tax Act, 2025 changes
The new Act, which came into force on 1 April 2026, rewrites the 1961 law in simpler language with fewer sections. It introduces the term ‘tax year’ for the financial year in which income is earned, so FY 2026-27 is simply tax year 2026-27. Section numbers have changed, so familiar references like 80C and 87A are now under new numbers, although the benefits carry over. Tax rates and slabs were not changed by the new Act. Returns for income earned up to 31 March 2026 (FY 2025-26) are still filed under the old Act.
Key dates for FY 2026-27
- Advance tax instalments: 15 June, 15 September, 15 December 2026 and 15 March 2027, if your tax after TDS is Rs 10,000 or more.
- Return filing due date for individuals not requiring audit: 31 July 2027, unless extended.
Filing for the first time? Read our step by step ITR filing guide, and make sure your PAN is linked with Aadhaar.
Sources
- Union Budget 2025-26 and 2026-27 speeches and Finance Acts (indiabudget.gov.in)
- Income-tax Act, 2025 (incometaxindia.gov.in)
- Income Tax Department tax calculator
Last updated: 26 September 2026. This is general information, not tax advice.
Frequently asked questions
What is the income tax slab for FY 2026-27 in the new regime?
Nil up to Rs 4 lakh, 5% for Rs 4-8 lakh, 10% for Rs 8-12 lakh, 15% for Rs 12-16 lakh, 20% for Rs 16-20 lakh, 25% for Rs 20-24 lakh and 30% above Rs 24 lakh.
Is income up to Rs 12 lakh tax-free in FY 2026-27?
Yes, under the new regime. The rebate of up to Rs 60,000 makes tax nil on taxable income up to Rs 12 lakh. For salaried people, the Rs 75,000 standard deduction takes the tax-free salary to Rs 12.75 lakh. Special-rate income like capital gains does not get the rebate.
Did Budget 2026 change income tax slabs?
No. Budget 2026-27 kept the slabs and rates introduced in Budget 2025 unchanged for FY 2026-27.
What is a tax year under the Income-tax Act 2025?
It is the financial year in which income is earned, from 1 April to 31 March. It replaces the separate terms previous year and assessment year used in the 1961 Act.
Can I switch between the old and new tax regime every year?
Salaried individuals without business income can choose every year. Those with business or professional income have limited switching options.