Income tax slabs & rates in India for FY 2026-27 (AY 2027-28)

The Finance Minister of India, Smt. Nirmala Sitharaman, presented the Budget 2026-2027 on 1 February 2026. This made her the first Indian finance minister to present the Union Budget for nine consecutive years. The announcements and amendments in the Budget will be effective from 1 April 2026, for the financial year 2026-27.

A crucial component of the Budget is the income tax slabs set by the government. These slabs are fixed income ranges, each taxed at a different rate. The 2026-27 Budget did not change the current income tax slabs.

This article provides all the required information on income tax slabs and tax rates under the new and old regimes for FY 2026-27.

Latest income tax slabs under the new tax regime (FY 2026-27)

The basic exemption limit under the new tax regime remains Rs. 4 lakh, meaning income up to this limit is tax-free. Salaried taxpayers get a standard deduction of Rs. 75,000. Besides, a rebate under Section 87A of Rs. 60,000 ensures that if your net taxable income is up to Rs. 12 lakh, you pay zero tax after the rebate (effectively up to Rs. 12.75 lakh with the standard deduction). The increase in rebate benefits middle-income earners the most, as they get lower tax rates and a higher tax-free limit without requiring many deductions.

The following table mentions the income tax slabs for 2026-27 and the related tax rates.

Latest income tax slabs under the old tax regime (FY 2026-27)

For FY 2026-27, taxpayers continue to enjoy the basic exemption limit of Rs. 2.5 lakh under the old tax regime. The standard deduction is Rs. 50,000. Many other deductions, such as Section 80C, home loan interest, HRA, health insurance premiums, etc., which help reduce taxable income, are also permitted. This regime benefits people who claim high deductions and investments, as they can save more on tax liability.

Here are the tax rates for the old tax regime:

Differences between the new and old tax regimes

The old and new tax regimes are different in many ways. The new tax regime has lower tax rates but fewer deductions. The old tax regime has higher rates but allows many deductions, including 80C, HRA, and home loan interest. The standard deduction is higher under the new regime, making it simple for most salaried taxpayers.

Here’s a table briefly outlining the differences between the new and old tax regimes.

The new regime is better if you have fewer deductions and want simplicity. The old regime is better if you claim large deductions. You must calculate tax under both regimes and choose to file income tax returns under the regime with the lower tax burden.

Who should opt for the new tax regime?

The new tax regime is suitable for people who want lower tax rates and a simple tax filing process. It is best for salaried employees, young earners, and those who don’t claim many deductions or exemptions. It reduces paperwork and makes tax calculation easier.

The major differences between the two are:

• Tax rates: The new regime tax slab rates are lower.
• Deductions: New tax regime deductions are limited.
• Exemptions: Most exemptions, like HRA, are not available.
• Compliance: Filing is faster and simpler.
• Flexibility: The old regime allows more tax-saving options.

All in all, you should opt for the new tax regime slabs if you have fewer investments and deductions, or when your annual income is Rs. 12.75 lakh, and you can use the standard deduction and Section 87A rebate to make your tax liability zero.

Who should opt for the old tax regime?

The old tax regime is best for people who use many deductions to reduce tax. It helps those who invest and claim exemptions.

You should choose the old regime tax slab if you fall under the following categories:

• Home loan borrowers: Interest deduction lowers taxable income.
• High investors: Those using Section 80C, PPF, ELSS, LIC, etc.
• Salaried employees claiming HRA and LTA: These exemptions help reduce tax.
• Families paying insurance and tuition fees: These expenses are eligible for deductions.
• High-income earners with deductions: The old regime can help save more than the new regime.

If your total deductions are high, the old tax regime slabs usually result in lower tax payable.

How much income is tax-free under the new tax regime?

An annual income of up to Rs. 12 lakh is effectively tax-free under the new tax regime (FY 2026-27). It is because of the Section 87A rebate of up to Rs. 60,000, which reduces your tax liability to zero. Salaried people also get a standard deduction of Rs. 75,000, so their salary up to Rs. 12.75 lakh can be tax-free after deduction and rebate.

This means most middle-income taxpayers pay no tax if their taxable income is within this limit. However, if income exceeds this level, the normal new regime tax slab rates apply. The higher rebate and deduction make the new regime more beneficial for many salaried individuals.

How can income up to Rs. 12 lakh be tax-free?

Income up to Rs. 12 lakh is tax-free under the new tax regime due to a rebate under Section 87A. If your taxable income is Rs. 12 lakh or less, the government gives a rebate of Rs. 60,000 that reduces your tax liability to zero. Earlier, this rebate was Rs. 25,000 if the taxable income was Rs. 7 lakh or less.

The tax amount on Rs. 12 lakh as per the new tax regime slabs is Rs. 60,000. Subtracting the Section 87A rebate, the total tax payable becomes zero. Hence, income up to Rs. 12 lakh can be tax-free under the new tax regime.

Examples of tax calculation under the new regime

The following example outlines the tax calculation for an annual income of Rs. 12 lakh under the new tax regime.

• Gross salary: Rs. 12,00,000
• Standard deduction: Rs. 75,000
• Total taxable income: Rs. 11,25,000

How to calculate income tax on your salary?

If you want to calculate income tax on your salary, here’s the step-by-step process you must follow:

1. Compute your gross salary: Add basic pay, HRA, bonuses, and allowances.
2. Subtract standard deduction: Reduce Rs. 75,000 for the new regime or Rs. 50,000 for the old regime.
3. Subtract other deductions: In the old regime, deduct 80C exemptions, insurance premiums, and home loan interest.
4. Get taxable income: This is the income on which tax is calculated.
5. Apply tax slabs: Use the correct slab rates for your chosen regime.
6. Check rebate eligibility: If your income is within rebate limits (Rs. 12 lakh in the new regime), your tax may become zero.

Income tax calculation example: Rs. 10 lakh

Here’s the tax calculation for an annual income of Rs. 10 lakh under both regimes.

● New regime

• Gross salary: Rs. 10,00,000
  • Standard deduction: Rs. 75,000
  • Taxable income: Rs. 9,25,000

The total tax liability under the new regime for an annual income of Rs. 10 lakh is zero.

● Old regime

• Gross salary: Rs. 10,00,000
  • Standard deduction: Rs. 50,000
  • Section 80C deduction: Rs. 1,50,000
  • Section 80D deduction: Rs. 25,000
  • HRA: Rs. 75,000
  • Total deductions: Rs. 3,00,000
  • Taxable income: Rs. 7,00,000

The total tax liability under the old regime for an annual income of Rs. 10 lakh is Rs. 54,600.

Income tax calculation example: Rs. 15 lakh

Here’s the tax calculation for an annual income of Rs. 15 lakh under both regimes.

● New regime

• Gross salary: Rs. 15,00,000
  • Standard deduction: Rs. 75,000
  • Taxable income: Rs. 14,25,000

The total tax liability under the new regime for an annual income of Rs. 15 lakh is Rs. 97,500.

● Old regime

• Gross salary: Rs. 15,00,000
  • Standard deduction: Rs. 50,000
  • Section 80C deduction: Rs. 1,50,000
  • Section 80D deduction: Rs. 25,000
  • HRA: Rs. 1,00,000
  • Home loan interest: Rs. 2,00,000
  • Total deductions: Rs. 5,25,000
  • Taxable income: Rs. 9,75,000

The total tax liability under the old regime for an annual income of Rs. 15 lakh is Rs. 1,11,800.

Income tax calculation example: Rs. 20 lakh

Here’s the tax calculation for an annual income of Rs. 20 lakh under both regimes.

● New regime

• Gross salary: Rs. 20,00,000
  • Standard deduction: Rs. 75,000
  • Taxable income: Rs. 19,25,000

The total tax liability under the new regime for an annual income of Rs. 20 lakh is Rs. 1,92,400.

● Old regime

• Gross salary: Rs. 20,00,000
  • Standard deduction: Rs. 50,000
  • Section 80C deduction: Rs. 1,50,000
  • Section 80D deduction: Rs. 25,000
  • HRA: Rs. 1,50,000
  • Home loan interest: Rs. 2,00,000
  • Total deductions: 5,75,000
  • Taxable income: Rs. 14,25,000

The total tax liability under the old regime for an annual income of Rs. 20 lakh is Rs. 2,49,600.

What is marginal relief in income tax?

Marginal relief is a tax benefit that ensures you do not pay more tax than the extra income you earn after crossing a tax limit. It applies when your income slightly exceeds the level where a rebate or surcharge stops. Without marginal relief, a small increase in income could lead to a large jump in tax burden.

For example, if the rebate applies up to Rs. 12 lakh and your income rises to Rs. 12.1 lakh, your tax should not exceed the extra Rs. 10,000 you earned. Marginal relief reduces the excess tax. It mainly applies near rebate limits and surcharge thresholds, protecting taxpayers from sudden and unfair tax increases.

How marginal relief is calculated (Simple example)

Marginal relief is calculated by comparing the extra income earned with the extra tax payable after crossing a rebate limit. If the extra tax exceeds the extra income, relief is given to reduce the tax.

Here’s an example to explain this better:

• Rebate limit: Rs. 12,00,000 (zero tax)
• Your income: Rs. 12,10,000
• Extra income: Rs. 10,000

The tax amount on an income of Rs. 12,10,000 is around Rs. 61,000.

Since the tax amount (Rs. 61,000) is much more than the extra income (Rs. 10,000), marginal relief applies.

You will pay only about Rs. 10,000 as tax, and not Rs. 61,000. This ensures your tax increase is fair and proportional.

Surcharge and Health & Education Cess

Surcharge and Health & Education Cess are extra charges added to your income tax. A surcharge applies only to high-income taxpayers. It is charged when your total income exceeds certain limits, such as Rs. 50 lakh, Rs. 1 crore, or more. The surcharge is calculated as a percentage of your income tax, not your income.

The Health & Education Cess is 4% of your total tax, including surcharge if applicable. It applies to all taxpayers, regardless of income level. This cess helps the government fund healthcare and education programs.

In a nutshell, the surcharge applies only to high-income individuals, while the 4% cess applies to everyone paying income tax.

What is the surcharge on income tax?

A surcharge on income tax is an extra tax levied on people with high annual incomes. It is calculated as a percentage of the income tax amount, not on total income. It increases the total tax liability for high earners.

The surcharge rates and income limits are as follows:

• 10% surcharge: Income above Rs. 50 lakh up to Rs. 1 crore
• 15% surcharge: Income above Rs. 1 crore up to Rs. 2 crore
• 25% surcharge: Income above Rs. 2 crore up to Rs. 5 crore
• 37% surcharge: Income above Rs. 5 crore (old regime)
• Maximum 25% in the new regime

Surcharge applies only after calculating the normal income tax.

What is the Health & Education Cess?

Health and Education Cess is an extra 4% charge on your total income tax. It is added after your income tax and surcharge (if any) are calculated. The government uses this money to improve healthcare and education services in India. This cess applies to all taxpayers, regardless of income level or tax regime.

For example:

If your total income tax is Rs. 50,000, the cess will be:

4% of Rs. 50,000 = Rs. 2,000

So, your final tax payable becomes Rs. 52,000.

This means cess slightly increases your final tax amount.

Who do income tax slabs apply to?

Income tax slabs apply to different types of taxpayers to determine how much tax you must pay based on your income level. They mainly apply to individuals, including salaried employees, freelancers, and business owners. Senior citizens and super senior citizens also use tax slabs, sometimes with special benefits under certain regimes.

Hindu Undivided Families (HUFs) must follow slab rules when filing their tax returns. Non-Resident Indians (NRIs) also pay tax on income earned in India according to slab provisions. In simple terms, anyone earning taxable income in India, whether resident or non-resident, must follow income tax slab rules.

Income tax slabs for individuals

Income tax slabs for individuals below 60 years apply based on their taxable income. Under the old tax regime, the latest tax slabs are:

The new tax regime slabs for individuals below 60 years are:

Income tax slabs for senior citizens

Income tax slabs for senior citizens (age 60-80 years) under the old tax regime give a higher basic exemption limit, reducing tax burden.

Senior citizens get a Rs. 3 lakh tax-free income, which is higher than that of individuals below 60, helping them save more tax after retirement.

When it comes to the new tax regime, the tax slabs for senior citizens are the same as those for individuals below 60 years.

Income tax slabs for HUF & other taxpayers

The tax rates for HUF and other taxpayers, like Association of Persons (AOP) and Body of Individuals (BOI), under the old tax regime are as follows:

Under the new tax regime, the tax rates are as follows:

Deductions & exemptions: Old regime vs new regime

The old regime allows many deductions, helping reduce taxable income and lowering the tax burden. The major benefits include:

• Section 80C (up to Rs. 1.5 lakh): Deduction for PPF, ULIP, ELSS, LIC, tuition fees
• Section 80D: Deduction for health insurance premium
• HRA: House Rent Allowance exemption
• Home loan interest: Deduction on housing loan interest up to Rs. 2 lakh
• LTA and other allowances: Travel and salary exemptions

This regime is useful for people with investments, insurance, or home loans.

The new tax regime removes most deductions but offers lower tax rates. It also provides a standard deduction of Rs. 75,000. It is best for people who prefer simple tax filing and fewer investments.

Deductions not allowed in the new tax regime

Most deductions and exemptions are not allowed under the new tax regime. This helps to keep tax filing simple but removes many tax-saving options.

The major deductions not allowed in the new tax regime include:

• Section 80C: No deduction for PPF, ELSS, LIC, or tuition fees.
• Section 80D: Health insurance premium deduction not allowed.
• HRA exemption: Salaried employees cannot claim rent exemption.
• LTA: Travel allowance exemption is not available.
• Home loan interest (Section 24): No deduction for self-occupied property.
• Other allowances: Many salary exemptions are removed.

The new tax regime allows only the standard deduction and limited specific deductions.

Deductions allowed in the old tax regime

Under the old regime, you can claim several deductions and exemptions to reduce your taxable income and save tax. So, if you are planning to file your income tax returns under the old tax regime, you can claim the following deductions:

• Section 80C allows you to claim up to Rs. 1.5 lakh for PPF, ELSS, LIC premiums, and tuition fees.
• Section 80D permits a deduction for health insurance premiums for self and family.
• HRA exemption lets you claim the rent you have paid.
• Home loan interest payout of up to Rs. 2 lakh can be deducted under Section 24.
• LTA exempts tax on travel expenses, provided you meet specific conditions.
• Standard deduction of Rs. 50,000 for salaried employees.

These benefits make the old regime useful for people with investments and loans.

Key income tax changes after the latest Budget

In the latest Budget 2026, there were no major changes to income tax slab rates, and the existing new and old regime structures continue. However, the Budget focused on economic growth and infrastructure.

The focus areas for this year’s Budget included:

• Record capital expenditure: Increased to Rs. 12.2 lakh crore to boost infrastructure like roads, railways, and industrial corridors.
• Infrastructure and job creation: Investment aims to support long-term growth and employment.
• Tax system simplification: Efforts are being made to make compliance easier for taxpayers.
• Support for the middle class and businesses: There will be measures to increase disposable income and investment.

Overall, the Budget focused more on economic growth and infrastructure than on changing tax slabs.

Major tax changes you should know

While there were no major tax changes in the Budget 2026, here’s a quick overview of the points you should keep in mind:

• Higher standard deduction in the new regime: Standard deduction is increased to Rs. 75,000, reducing taxable salary.
• Higher rebate limit: Tax liability becomes zero if taxable income is up to Rs. 12 lakh under the new regime.
• New tax regime remains default: Salaried taxpayers are automatically placed in the new regime unless they choose the old one.
• Simplified tax structure: Fewer deductions but lower tax rates make filing easier.
• Focus on middle-income relief: Changes aim to increase savings and reduce tax burden for salaried individuals.

Impact of budget changes on salaried taxpayers

• No major slab changes: The Budget did not change income tax rates or slab structure, so salaried taxpayers will continue to pay tax under existing rules.
• Standard deduction remains Rs. 75,000: Salaried employees can reduce taxable income by Rs. 75,000 without any proof, increasing take-home salary.
• Tax-free income up to Rs. 12 lakh: A rebate of up to Rs. 60,000 makes taxable income up to Rs. 12 lakh tax-free under the new regime.
• Up to Rs. 12.75 lakh salary tax-free: With the Rs. 75,000 standard deduction, many salaried individuals pay zero tax up to this level.
• New regime still default: Most salaried taxpayers benefit from simpler filing and lower compliance.

How to check which income tax slab you fall under?

The following simple steps help you check which income tax slab you fall under:

• Calculate your gross income: Add salary, bonuses, rent, interest, and other earnings. This gives your total income.
• Subtract deductions: Reduce standard deduction and other eligible deductions (if using the old regime).
• Find your taxable income: The remaining amount is your taxable income.
• Choose your tax regime: Decide whether you are using the new or old tax regime, as slab limits differ.
• Match with slab range: Compare your taxable income with the slab table to see your tax rate.

Tips to save income tax legally

Here are some simple tips to save income tax legally:

• Invest under Section 80C: Put money in PPF, ELSS, or LIC to reduce taxable income.
• Buy health insurance (Section 80D): The premium paid for yourself and your family helps claim a tax deduction.
• Claim HRA and rent benefits: Salaried people paying rent can reduce their taxable salary.
• Use home loan deductions: Interest and principal repayment offer tax savings.
• Choose the right tax regime: Compare old and new regimes and select the one with lower tax.
• Use standard deduction: Salaried employees automatically get deduction benefits.
• Plan investments early: Investing early during the year avoids a last-minute tax burden and improves savings.

Conclusion: Choosing the right income tax regime

Choosing the right income tax regime is important for lowering your tax liability and increasing your savings. The new tax regime is suitable for people who prefer lower tax rates and simple filing with fewer deductions. The old tax regime is better for those who claim deductions like 80C, HRA, health insurance, and home loan interest. You should always calculate your tax under both regimes before filing your return. This helps you see which option gives a lower tax. If you make the right choice, you can save money legally and manage your finances better every year.