Tax Guide · 17 April 2026
What Are the Income Tax Slabs for FY 2026-27 Under the New Regime?
Salaried Indians pay zero income tax up to ₹12,75,000 in FY 2026-27 (AY 2027-28) under the New Tax Regime. That ceiling combines the ₹75,000 standard deduction with the ₹60,000 Section 87A rebate. Slabs: nil up to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, scaling to 30% above ₹24 lakh. New regime is the default; opt into the old regime via Form 10-IEA.
By Mr. Harshal Harshe
Last reviewed
19 June 2026
In this section
Answers
- What Are the Income Tax Slabs for FY 2026-27 Under the New Regime?
- What Building a GST Invoice Tool Taught Me About the Word "Free"
- What Is the Best Free GST Invoice Generator in India (2026)?
- Can an NRI Claim HRA, and What Happens When You Pay Rent to an NRI Landlord?
- What Fields Must a GST Tax Invoice Carry Under Section 31 and Rule 46?
- Do I Have to Issue e-Invoices? The ₹5 Crore GST Threshold for FY 2026-27
- GST Reverse Charge: When Does a Small Business Pay GST for Its Supplier?
- Pakka Bill vs Kaccha Bill: Which One Is a Legally Valid GST Invoice?
- No HRA From Your Employer? How Do You Claim Rent Under Section 80GG?
- Employer Has Not Issued Form 16 by 15 June: Can You Still File Your ITR?
On this page
- What are the new tax regime slabs for FY 2026-27 (AY 2027-28)?
- How does the Section 87A rebate make income up to Rs. 12 lakh tax-free?
- What standard deduction applies under the new tax regime?
- Is the old tax regime still available for FY 2026-27?
- Which regime should you pick, old or new?
- What changed in the new regime versus FY 2024-25?
- How do TDS and salary slips reflect your chosen regime?
The new tax regime makes income up to Rs. 12.75 lakh tax-free for everyone.
The Section 87A rebate of Rs. 60,000 zeroes tax only for resident individuals on slab income up to Rs. 12 lakh; the Rs. 12.75 lakh figure applies to salaried people after the Rs. 75,000 standard deduction, and capital gains taxed at special rates get no rebate.
What are the new tax regime slabs for FY 2026-27 (AY 2027-28)?
Short answer
Income is nil up to Rs. 4,00,000 and rises to 30% above Rs. 24,00,000 under Section 115BAC for the year starting 1 April 2026.
These slabs apply to resident individuals (including senior citizens) under the Finance Act 2025 framework. A Health and Education Cess of 4% applies on the tax payable, and surcharge applies above Rs. 50 lakh.
| Income range | Tax rate |
|---|---|
| Rs. 0 – Rs. 4,00,000 | Nil |
| Rs. 4,00,001 – Rs. 8,00,000 | 5% |
| Rs. 8,00,001 – Rs. 12,00,000 | 10% |
| Rs. 12,00,001 – Rs. 16,00,000 | 15% |
| Rs. 16,00,001 – Rs. 20,00,000 | 20% |
| Rs. 20,00,001 – Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
New regime income tax slabs, FY 2026-27. Source: Finance Act 2025, Section 115BAC, Income Tax Department.
How does the Section 87A rebate make income up to Rs. 12 lakh tax-free?
Short answer
The Section 87A rebate is Rs. 60,000 under the new regime, so resident individuals with taxable income up to Rs. 12,00,000 pay zero tax.
- Budget 2025 raised the rebate from Rs. 25,000 to Rs. 60,000 and pushed the tax-free ceiling from Rs. 7 lakh to Rs. 12 lakh.
- With the standard deduction of Rs. 75,000 for salaried employees, the tax-free ceiling moves to Rs. 12,75,000 of gross salary.
- The rebate applies only to resident individuals, not HUFs, NRIs, or non-residents.
- It applies only on income taxed at slab rates; capital gains taxed under special rates do not benefit.
What standard deduction applies under the new tax regime?
Short answer
Salaried individuals and pensioners get a flat Rs. 75,000 standard deduction under the new regime (raised from Rs. 50,000 in Budget 2024), with no proof needed.
- The deduction applies on its own, and family pensioners get a Rs. 25,000 deduction.
- Under the new regime, allowance-level exemptions like HRA, LTA, and transport / conveyance allowance are not separately exempt because the standard deduction subsumes them.
- Under the old regime, transport allowance up to Rs. 1,600/month was historically exempt.
- The conveyance receipt still serves as proof of payment for employer reimbursement.
Is the old tax regime still available for FY 2026-27?
Short answer
Yes, the old regime continues as an opt-in with unchanged slabs (nil up to Rs. 2,50,000 to 30% above Rs. 10,00,000) and a Section 87A rebate of Rs. 12,500.
Under the old regime, income up to Rs. 5 lakh is tax-free and the standard deduction is Rs. 50,000. HRA exemption (Section 10(13A)), Section 80C (Rs. 1.5 lakh), 80D, home loan interest under Section 24, and most other deductions are available only under the OLD regime.
| Income range | Tax rate |
|---|---|
| Rs. 0 – Rs. 2,50,000 | Nil |
| Rs. 2,50,001 – Rs. 5,00,000 | 5% |
| Rs. 5,00,001 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Old regime income tax slabs, FY 2026-27 (no change from prior years). Source: Income Tax Department.
Which regime should you pick, old or new?
Short answer
If your total deductions exceed roughly Rs. 4–5 lakh the OLD regime is usually better; with minimal deductions the NEW regime wins on lower rates and the Rs. 12 lakh rebate ceiling.
- The old regime usually wins when HRA + 80C + home loan interest + 80D + standard deduction exceeds roughly Rs. 4–5 lakh.
- The new regime wins for minimal-deduction filers on the lower rates and Rs. 12 lakh rebate ceiling.
- Run both calculations every year, because the breakeven shifts as the new regime slabs widen.
- The new tax regime is the default; you must opt into the old regime each year, using Form 10-IEA if you have business income.
What changed in the new regime versus FY 2024-25?
Short answer
Budget 2025 made three changes effective FY 2025-26 and continuing FY 2026-27, while old regime numbers stayed the same.
- Slabs compressed: the lowest taxable bracket starts at Rs. 4 lakh (was Rs. 3 lakh) and the highest 30% rate starts at Rs. 24 lakh (was Rs. 15 lakh).
- The rebate under Section 87A was raised to Rs. 60,000, pushing the effective tax-free ceiling from Rs. 7 lakh to Rs. 12 lakh.
- The salaried tax-free ceiling is now Rs. 12.75 lakh after the Rs. 75,000 standard deduction.
- The old tax regime numbers stayed the same.
How do TDS and salary slips reflect your chosen regime?
Short answer
Your employer deducts TDS based on the regime you declare in your investment proofs, and if you have not chosen the old regime, TDS defaults to the new regime.
Check that your salary slip and Form 16 reflect the regime you filed under, since mismatches are a common cause of refund delays. See our guide on reconciling salary slip and Form 16 for the line-by-line checks.