Home › Articles › Income Tax Slab FY 2026-27

Income Tax Slab FY 2026-27 – Complete Guide (New & Old Regime)

📅 Updated April 2026 • ⏱️ 8 min read • 💰 Budget 2026 Changes Included

The current tax year in India is Financial Year 2026-27, which runs from 1 April 2026 to 31 March 2027. The Union Budget 2026 introduced major changes to income tax slabs, with the biggest headline being zero tax up to ₹12 lakh annual income under the new tax regime.

Taxpayers now have a choice between two tax structures: the New Tax Regime with lower rates but no deductions, and the Old Tax Regime with higher rates but multiple deductions like 80C, HRA, and home loan interest. This comprehensive guide covers both regimes with complete slab details, examples, and helps you decide which one saves you more money.

🎯 Key Takeaway: Under the new tax regime for FY 2026-27, salaried individuals earning up to ₹12 lakh pay ZERO income tax thanks to ₹75,000 standard deduction and ₹60,000 Section 87A rebate. This is the biggest tax relief for middle-class taxpayers in recent years.

📊 New Tax Regime Slabs for FY 2026-27

The new tax regime is now the default tax structure for all taxpayers. It features 7 income slabs with rates ranging from 0% to 30%. The regime offers lower tax rates but does not allow most deductions and exemptions.

Income Slab Tax Rate Tax Amount
Up to ₹4,00,000 0% Nil
₹4,00,001 – ₹8,00,000 5% ₹20,000
₹8,00,001 – ₹12,00,000 10% ₹40,000
₹12,00,001 – ₹16,00,000 15% ₹60,000
₹16,00,001 – ₹20,00,000 20% ₹80,000
₹20,00,001 – ₹24,00,000 25% ₹1,00,000
Above ₹24,00,000 30% Variable

💰 Benefits Under New Tax Regime

  • ₹75,000 Standard Deduction: Available for salaried employees and pensioners automatically
  • Section 87A Rebate: ₹60,000 rebate for total income up to ₹12 lakh (after standard deduction)
  • Zero Tax up to ₹12L: Effective zero tax for salaried individuals earning up to ₹12 lakh
  • Simplified Filing: No need to submit investment proofs or maintain deduction records
  • Lower Rates: Progressive slabs ensure lower tax burden across income levels

📌 How Zero Tax Works for ₹12 Lakh Salary

Here's the calculation breakdown:

  • Gross Salary: ₹12,00,000
  • Less: Standard Deduction: ₹75,000
  • Taxable Income: ₹11,25,000
  • Tax on ₹11.25L (as per slabs): ₹60,000
  • Less: Section 87A Rebate: ₹60,000
  • Final Tax: ₹0 (Zero)

📜 Old Tax Regime Slabs for FY 2026-27

The old tax regime continues to be available as an optional choice. It has 4 income slabs with rates from 0% to 30%. The key advantage is the ability to claim various deductions and exemptions like Section 80C, HRA, and home loan interest.

Income Slab Tax Rate Tax Amount
Up to ₹2,50,000 0% Nil
₹2,50,001 – ₹5,00,000 5% ₹12,500
₹5,00,001 – ₹10,00,000 20% ₹1,00,000
Above ₹10,00,000 30% Variable

💼 Deductions Available Under Old Tax Regime

  • Standard Deduction: ₹50,000 for salaried employees and pensioners
  • Section 80C: Up to ₹1,50,000 (PPF, EPF, ELSS, LIC, NSC, etc.)
  • Section 80D: Health insurance premium (₹25,000 / ₹50,000 for senior citizens)
  • Section 80E: Education loan interest (no limit)
  • Section 24(b): Home loan interest up to ₹2,00,000
  • HRA Exemption: House Rent Allowance as per actual rent paid
  • Section 80CCD(1B): Additional ₹50,000 for NPS contribution
  • LTA: Leave Travel Allowance for domestic travel

⚖️ New vs Old Tax Regime: Which Saves More?

The choice between new and old regime depends on your income level, available deductions, and financial goals. Here's a comparison table:

Feature New Regime Old Regime
Number of Slabs 7 slabs (0% to 30%) 4 slabs (0% to 30%)
Standard Deduction ₹75,000 ₹50,000
80C Deduction ❌ Not Allowed ✅ Up to ₹1,50,000
HRA Exemption ❌ Not Allowed ✅ Allowed
Home Loan Interest ❌ Not Allowed ✅ Up to ₹2,00,000
Section 87A Rebate ₹60,000 (income ≤ ₹12L) ₹12,500 (income ≤ ₹5L)
Zero Tax Up To ₹12,00,000 ₹2,50,000

💡 Tax Calculation Examples

Example 1: ₹8 Lakh Salary (No Deductions)

  • New Regime: Tax = ₹10,000 (after ₹75K deduction & rebate)
  • Old Regime: Tax = ₹62,400 (only standard deduction)
  • Winner: New Regime saves ₹52,400

Example 2: ₹12 Lakh Salary (No Deductions)

  • New Regime: Tax = ₹0 (Zero tax!)
  • Old Regime: Tax = ₹1,46,800
  • Winner: New Regime saves ₹1,46,800

Example 3: ₹15 Lakh Salary (with ₹1.5L in 80C + HRA ₹3L)

  • New Regime: Tax = ₹1,17,000
  • Old Regime: Tax = ₹91,000 (after all deductions)
  • Winner: Old Regime saves ₹26,000

🧮 Calculate Your Exact Tax

Use our free tax calculator to compare both regimes and find which one saves you more money

Calculate Now →

💰 Surcharge & Cess for FY 2026-27

In addition to the base tax rates, high-income earners must pay surcharge, and everyone pays Health & Education Cess:

📈 Surcharge Slabs

Income Range Surcharge Rate
Up to ₹50 lakh Nil
₹50L – ₹1 Crore 10%
₹1 Cr – ₹2 Crore 15%
₹2 Cr – ₹5 Crore 25%
Above ₹5 Crore 37%

🏥 Health & Education Cess

A 4% cess is applicable on the total tax amount (including surcharge). This applies to all taxpayers regardless of income level.

Calculation Formula:

  • Step 1: Calculate base tax as per slab
  • Step 2: Add surcharge (if applicable)
  • Step 3: Add 4% cess on (Tax + Surcharge)
  • Final Tax Liability = Base Tax + Surcharge + Cess

🎯 Who Should Choose Which Regime?

✅ Choose New Tax Regime If:

  • Your annual income is between ₹5 lakh to ₹15 lakh
  • You don't have significant deductions (no HRA, no home loan)
  • You prefer simplicity and don't want to maintain investment proofs
  • You're not claiming Section 80C investments
  • You want to maximize take-home salary without tax planning

📋 Choose Old Tax Regime If:

  • You claim HRA and it's a substantial amount
  • You have a home loan and claim interest deduction
  • You regularly invest in 80C instruments (₹1.5L or more annually)
  • Your income is above ₹15 lakh with multiple deductions
  • You have other deductions like medical insurance, education loan, NPS
💡 Pro Tip: Salaried employees can switch between regimes every financial year. Business owners and professionals can switch only once in their lifetime. Use our regime comparison calculator to make the right choice.

🔄 How to Switch Between Tax Regimes

For Salaried Employees:

  1. You can choose your preferred regime at the start of each financial year
  2. Inform your employer by submitting Form 12BB and tax regime declaration
  3. Your employer will deduct TDS accordingly
  4. You can also choose while filing ITR if you didn't inform employer

For Business/Profession:

  1. Once you opt for new regime, you cannot go back to old regime
  2. The choice is binding for all future years
  3. Choose carefully after consulting a tax advisor

📅 Important Tax Dates for FY 2026-27

  • FY 2026-27 Period: 1 April 2026 to 31 March 2027
  • Assessment Year: AY 2027-28
  • ITR Filing Deadline: 31 July 2027 (for individuals)
  • Advance Tax Due Dates: 15 June, 15 Sept, 15 Dec, 15 March
  • Last Date for Tax Saving Investments: 31 March 2027

❓ Frequently Asked Questions (FAQs)

1. What is the income tax slab for FY 2026-27?
For FY 2026-27, the new tax regime has 7 slabs ranging from 0% (up to ₹4L) to 30% (above ₹24L). The old regime has 4 slabs from 0% (up to ₹2.5L) to 30% (above ₹10L). Taxpayers can choose either regime.
2. Is there really zero tax up to ₹12 lakh?
Yes, under the new tax regime, salaried individuals earning up to ₹12 lakh pay zero tax due to ₹75,000 standard deduction and ₹60,000 Section 87A rebate. This is applicable for FY 2026-27 onwards as per Budget 2026 announcements.
3. Which tax regime is better for me?
If you earn between ₹5-12 lakh with no major deductions, new regime is better. If you have HRA, home loan, or significant 80C investments, old regime may save more. Use our tax calculator to compare both regimes for your specific income and deductions.
4. Can I switch between old and new regime every year?
Salaried employees can switch between regimes every financial year. However, business owners and professionals can switch only once in their lifetime. Inform your employer at the start of the year about your choice.
5. What is Section 87A rebate?
Section 87A provides a rebate on tax liability. Under new regime, it's ₹60,000 for income up to ₹12 lakh. Under old regime, it's ₹12,500 for income up to ₹5 lakh. This rebate makes effective tax zero for lower income groups.
6. Are tax slabs different for senior citizens?
Under the new tax regime, tax slabs are the same for everyone including senior citizens. However, under the old regime, senior citizens (60-80 years) get ₹3 lakh basic exemption, and super senior citizens (80+ years) get ₹5 lakh exemption.
7. How much tax will I pay on ₹15 lakh salary?
Under new regime (without deductions): ₹1,17,000 approximately. Under old regime with ₹1.5L in 80C and standard deduction: ₹1,04,000 approximately. The exact amount depends on your specific deductions and exemptions.
8. What is standard deduction for FY 2026-27?
Standard deduction is ₹75,000 under new tax regime and ₹50,000 under old tax regime. This is available to all salaried employees and pensioners automatically, without submitting any proof or documents.
9. When do I need to pay surcharge on income tax?
Surcharge is applicable when your total income exceeds ₹50 lakh. The surcharge rate varies from 10% to 37% depending on income level. Additionally, 4% Health & Education Cess is applicable on (tax + surcharge) for all taxpayers.
10. How is cess calculated on income tax?
Health & Education Cess is calculated at 4% on the total of income tax and surcharge (if applicable). For example, if your tax is ₹1,00,000 and surcharge is ₹10,000, cess will be 4% of ₹1,10,000 = ₹4,400. Total tax = ₹1,14,400.
📌 Summary: FY 2026-27 offers significant tax relief under the new regime with zero tax up to ₹12 lakh. While the new regime suits most salaried employees, those with substantial deductions should evaluate the old regime. Calculate your tax using both regimes to make an informed decision. Remember, you can switch regimes every year as a salaried employee!

Disclaimer: This article provides general information about income tax slabs for FY 2026-27 based on Budget 2026 announcements. Tax laws are subject to change. For personalized tax advice and planning, please consult a qualified Chartered Accountant.