Income tax slabs for Tax Year 2026-27: new vs old regime

Tax Year 2026-27 runs from 1 April 2026 to 31 March 2027 and is the first year under the Income-tax Act, 2025. Budget 2026 kept the rates unchanged, so the slabs, the ₹12 lakh rebate and the standard deduction introduced in 2025 continue. These rates also decide your advance tax for this year and the TDS your employer deducts.

New tax regime slabs (default)

• Rebate: resident individuals with total income up to ₹12,00,000 get a rebate of up to ₹60,000 – effectively zero tax. It does not apply to special-rate income such as capital gains taxed at 20% or 12.5%.
• Standard deduction: ₹75,000 for salary and pension, so salary up to ₹12,75,000 is tax-free.
• Few deductions: employer's NPS contribution, Agniveer corpus and a handful of others are allowed; 80C, 80D and HRA are not.

Old tax regime slabs (on opting out)

• Rebate: up to ₹12,500 for resident individuals with total income up to ₹5,00,000.
• Standard deduction: ₹50,000 for salary and pension.
• Deductions allowed: 80C (₹1.5 lakh), 80D, home-loan interest on self-occupied property (₹2 lakh), HRA, LTA, 80CCD(1B) NPS (₹50,000) and others.

In both regimes, health and education cess of 4% is added to tax plus surcharge.

Marginal relief just above ₹12 lakh

Without relief, earning ₹1 above ₹12 lakh would create a tax of over ₹60,000. Marginal relief caps the tax at the income above ₹12 lakh.

Example: total income ₹12,10,000 (new regime). Tax by slabs = ₹60,000 + 15% of ₹10,000 = ₹61,500. Income above ₹12 lakh = ₹10,000, so tax is limited to ₹10,000 + 4% cess = ₹10,400. The relief stops at about ₹12,70,588, where slab tax equals the excess income.

Tax payable at a glance (new regime, including cess)

Total income means income after the standard deduction and other allowed deductions.

Worked example: salary ₹15 lakh – which regime wins?

• New regime: ₹15,00,000 – ₹75,000 standard deduction = ₹14,25,000. Tax = ₹20,000 + ₹40,000 + 15% of ₹2,25,000 (₹33,750) = ₹93,750 + cess ₹3,750 = ₹97,500.
• Old regime with ₹50,000 standard deduction, ₹1,50,000 in 80C, ₹25,000 in 80D and ₹1,50,000 HRA exemption: taxable income ₹11,25,000. Tax = ₹12,500 + ₹1,00,000 + 30% of ₹1,25,000 (₹37,500) = ₹1,50,000 + cess ₹6,000 = ₹1,56,000.
• Result: the new regime saves ₹58,500. The old regime wins only when deductions are very large – typically a big home-loan interest claim plus full 80C, 80D, NPS and high HRA.

Surcharge for higher incomes

• 10% on income above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore.
• 37% above ₹5 crore applies only in the old regime; the new regime caps surcharge at 25%.
• Surcharge on dividend and capital gains taxed at special rates is capped at 15%.
• Marginal relief applies at each surcharge threshold.

How to choose and when

• Salaried and pensioners: tell your employer at the start of the year for TDS; the final choice is made in the return, by the due date.
• Business or professional income: opting out of the new regime needs a form filed by the due date of return; you can return to the new regime only once.
• Plan advance tax on the regime you expect to choose, to avoid interest.

Not sure which regime suits your income mix? Our tax planning service compares both with your actual figures, and our ITR filing team files the return on the regime that saves more.

Rates as applicable to resident individuals for Tax Year 2026-27, as on 7 November 2026. Figures are rounded and for illustration; actual tax depends on your full income and deductions.

Frequently asked questions