Tata Capital > Blog > Wealth Services > Income tax slabs & rates in India for FY 2026-27 (AY 2027-28)
10 March 2026
18 mins read
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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.
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.
| Taxable income (Rs.) | Tax rate |
| Up to 4 lakh | Nil |
| 4 lakh to 8 lakh | 5% |
| 8 lakh to 12 lakh | 10% |
| 12 lakh to 16 lakh | 15% |
| 16 lakh to 20 lakh | 20% |
| 20 lakh to 24 lakh | 25% |
| Above 24 lakh | 30% |
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.
| Taxable income (Rs.) | Tax rate |
| Up to 2.5 lakh | Nil |
| 2.5 lakh to 5 lakh | 5% |
| 5 lakh to 10 lakh | 20% |
| Above 10 lakh | 30% |
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.
| Feature | New tax regime | Old tax regime |
| Tax rates | Lower | Higher |
| Deductions | Limited | Many |
| Standard deduction | Rs.75,000 | Rs. 50,000 |
| Basic exemption limit | Up to Rs. 4 lakh | Up to Rs. 2.5 lakh |
| Tax filing procedure | Simplified | Tedious |
| Best for | Fewer investments | High deductions |
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.
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:
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.
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:
If your total deductions are high, the old tax regime slabs usually result in lower tax payable.
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.
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.
The following example outlines the tax calculation for an annual income of Rs. 12 lakh under the new tax regime.
| Slab | Tax rate | Amount (Rs.) |
| Up to 4 lakh | 0% | 0 |
| 4 lakh to 8 lakh (4,00,000) | 5% | 20,000 |
| 8 lakh to 12 lakh (3,25,000) | 10% | 32,500 |
| Total tax | 52,500 | |
| Section 87A rebate | (52,500) | |
| Final tax payable | 0 |
If you want to calculate income tax on your salary, here’s the step-by-step process you must follow:
Here’s the tax calculation for an annual income of Rs. 10 lakh under both regimes.
| Latest tax slabs in India | Tax liability (Rs.) | |
| Up to 4 lakh | Rs. 4,00,000 at 0% | 0 |
| 4 lakh to 8 lakh | Rs. 4,00,000 at 5% | 20,000 |
| 8 lakh to 12 lakh | Rs. 1,25,000 at 10% | 12,500 |
| Total | 32,500 | |
| Section 87A rebate (As income is below Rs. 12 lakh) | (32,500) | |
| Tax after rebate | 0 | |
| Cess (4%) | 0 | |
| Total tax liability | 0 | |
The total tax liability under the new regime for an annual income of Rs. 10 lakh is zero.
| Latest tax slabs in India | Tax liability (Rs.) | |
| Up to 2.5 lakh | Rs. 2,50,000 at 0% | 0 |
| 2.5 lakh to 5 lakh | Rs. 2,50,000 at 5% | 12,500 |
| 5 lakh to 10 lakh | Rs. 2,00,000 at 20% | 40,000 |
| Total | 52,500 | |
| Cess (4%) | 2,100 | |
| Total tax liability | 54,600 | |
The total tax liability under the old regime for an annual income of Rs. 10 lakh is Rs. 54,600.
Here’s the tax calculation for an annual income of Rs. 15 lakh under both regimes.
| Latest tax slabs in India | Tax liability (Rs.) | |
| Up to 4 lakh | Rs. 4,00,000 at 0% | 0 |
| 4 lakh to 8 lakh | Rs. 4,00,000 at 5% | 20,000 |
| 8 lakh to 12 lakh | Rs. 4,00,000 at 10% | 40,000 |
| 12 lakh to 16 lakh | Rs. 2,25,000 at 15% | 33,750 |
| Total | 93,750 | |
| Cess (4%) | 3,750 | |
| Total tax liability | 97,500 | |
The total tax liability under the new regime for an annual income of Rs. 15 lakh is Rs. 97,500.
| Latest tax slabs in India | Tax liability (Rs.) | |
| Up to 2.5 lakh | Rs. 2,50,000 at 0% | 0 |
| 2.5 lakh to 5 lakh | Rs. 2,50,000 at 5% | 12,500 |
| 5 lakh to 10 lakh | Rs. 4,75,000 at 20% | 95,000 |
| Total | 1,07,500 | |
| Cess (4%) | 4,300 | |
| Total tax liability | 1,11,800 | |
The total tax liability under the old regime for an annual income of Rs. 15 lakh is Rs. 1,11,800.
Here’s the tax calculation for an annual income of Rs. 20 lakh under both regimes.
| Latest tax slabs in India | Tax liability (Rs.) | |
| Up to 4 lakh | Rs. 4,00,000 at 0% | 0 |
| 4 lakh to 8 lakh | Rs. 4,00,000 at 5% | 20,000 |
| 8 lakh to 12 lakh | Rs. 4,00,000 at 10% | 40,000 |
| 12 lakh to 16 lakh | Rs. 4,00,000 at 15% | 60,000 |
| 16 lakh to 20 lakh | Rs. 3,25,000 at 20% | 65,000 |
| Total | 1,85,000 | |
| Cess (4%) | 7,400 | |
| Total tax liability | 1,92,400 | |
The total tax liability under the new regime for an annual income of Rs. 20 lakh is Rs. 1,92,400.
| Latest tax slabs in India | Tax liability (Rs.) | |
| Up to 2.5 lakh | Rs. 2,50,000 at 0% | 0 |
| 2.5 lakh to 5 lakh | Rs. 2,50,000 at 5% | 12,500 |
| 5 lakh to 10 lakh | Rs. 5,00,000 at 20% | 1,00,000 |
| Above 10 lakh | Rs. 4,25,000 at 30% | 1,27,500 |
| Total | 2,40,000 | |
| Cess (4%) | 9,600 | |
| Total tax liability | 2,49,600 | |
The total tax liability under the old regime for an annual income of Rs. 20 lakh is Rs. 2,49,600.
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.
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:
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 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.
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:
Surcharge applies only after calculating the normal income tax.
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.
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 below 60 years apply based on their taxable income. Under the old tax regime, the latest tax slabs are:
| Taxable income (Rs.) | Tax rate |
| Up to 2.5 lakh | Nil |
| 2.5 lakh to 5 lakh | 5% |
| 5 lakh to 10 lakh | 20% |
| Above 10 lakh | 30% |
The new tax regime slabs for individuals below 60 years are:
| Taxable income (Rs.) | Tax rate |
| Up to 4 lakh | Nil |
| 4 lakh to 8 lakh | 5% |
| 8 lakh to 12 lakh | 10% |
| 12 lakh to 16 lakh | 15% |
| 16 lakh to 20 lakh | 20% |
| 20 lakh to 24 lakh | 25% |
| Above 24 lakh | 30% |
Income tax slabs for senior citizens (age 60-80 years) under the old tax regime give a higher basic exemption limit, reducing tax burden.
| Taxable income (Rs.) | Tax rate |
| Up to 3 lakh | Nil |
| 3 lakh to 5 lakh | 5% |
| 5 lakh to 10 lakh | 20% |
| Above 10 lakh | 30% |
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.
| Taxable income (Rs.) | Tax rate |
| Up to 4 lakh | Nil |
| 4 lakh to 8 lakh | 5% |
| 8 lakh to 12 lakh | 10% |
| 12 lakh to 16 lakh | 15% |
| 16 lakh to 20 lakh | 20% |
| 20 lakh to 24 lakh | 25% |
| Above 24 lakh | 30% |
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:
| Taxable income (Rs.) | Tax rate |
| Up to 2.5 lakh | Nil |
| 2.5 lakh to 5 lakh | 5% above Rs. 2.5 lakh |
| 5 lakh to 10 lakh | Rs. 12,500 + 20% above Rs. 5 lakh |
| Above 10 lakh | Rs. 1,12,500 + 30% above Rs. 10 lakh |
Under the new tax regime, the tax rates are as follows:
| Taxable income (Rs.) | Tax rate |
| Up to 3 lakh | Nil |
| 3 lakh to 7 lakh | 5% above Rs. 3 lakh |
| 7 lakh to 10 lakh | Rs. 20,000 + 10% above Rs. 7 lakh |
| 10 lakh to 12 lakh | Rs. 50,000 + 15% above Rs. 10 lakh |
| 12 lakh to 15 lakh | Rs. 70,000 + 20% above Rs. 12 lakh |
| Above 15 lakh | Rs. 1,40,000 + 30% above Rs. 15 lakh |
The old regime allows many deductions, helping reduce taxable income and lowering the tax burden. The major benefits include:
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.
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:
The new tax regime allows only the standard deduction and limited specific deductions.
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:
These benefits make the old regime useful for people with investments and loans.
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:
Overall, the Budget focused more on economic growth and infrastructure than on changing tax slabs.
While there were no major tax changes in the Budget 2026, here’s a quick overview of the points you should keep in mind:
The following simple steps help you check which income tax slab you fall under:
Here are some simple tips to save income tax legally:
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.
Under the new regime, income up to Rs. 4 lakh is tax-free. The tax rates then increase gradually: 5% up to Rs. 8 lakh, 10% up to Rs. 12 lakh, 15% up to Rs. 16 lakh, 20% up to Rs. 20 lakh, 25% up to Rs. 24 lakh, and 30% above Rs. 24 lakh. For the old regime, income up to Rs. 2.5 lakh is tax-free. The tax rates increase to 5% for up to Rs. 5 lakh, 20% for up to Rs. 10 lakh, and 30% for above Rs. 10 lakh.
The new regime is better for people with fewer deductions and simpler taxes. The old regime is better if you claim deductions like 80C, HRA, or home loan interest. You should calculate tax under both regimes and choose the lower amount option.
No, most deductions like HRA, Section 80C investments, health insurance (80D), and home loan interest are not allowed in the new regime. Only the standard deduction and a few limited benefits are available. This keeps tax calculation simple but reduces saving options.
Salaried individuals can claim a standard deduction of Rs. 75,000 under the new tax regime. Under the old regime, the standard deduction is Rs. 50,000. This amount is deducted from salary automatically, reducing taxable income and lowering overall tax liability.
You can switch regimes while filing your income tax return. Salaried employees can also inform their employer at the start of the financial year. Business owners have restrictions on switching, so they must choose carefully before selecting a regime.
An income tax slab is a range of income taxed at a specific rate. As your income increases, higher portions are taxed at higher rates. This ensures fair taxation, where people earning more pay a higher tax, while those earning a lower income are taxed less.
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