What Tax Year 2026-27 changed
The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026 and applies for Tax Year 2026-27. Many section numbers moved; the substance of the main provisions carried through. The Finance Act 2025 slabs were kept by the Finance Act 2026, and the slab tables for both regimes on this page are the same as those announced in Budget 2025. Surcharge bands, the cess rate and the special-rate caps carry on unchanged.
The new regime remains the default. Salaried readers who have not opted for the old regime are taxed under the new regime unless they choose otherwise in the return. Age has no effect on the new regime slabs; it only shifts the basic exemption under the old regime for a senior citizen (60 to 79) to ₹3,00,000 and for a super senior citizen (80 and above) to ₹5,00,000.
New regime slabs, FY 2026-27
| Slab | Rate |
|---|---|
| 0 to 4,00,000 | 0 per cent |
| 4,00,001 to 8,00,000 | 5 per cent |
| 8,00,001 to 12,00,000 | 10 per cent |
| 12,00,001 to 16,00,000 | 15 per cent |
| 16,00,001 to 20,00,000 | 20 per cent |
| 20,00,001 to 24,00,000 | 25 per cent |
| Above 24,00,000 | 30 per cent |
Standard deduction for a salaried reader or a pensioner is ₹75,000 under the new regime. A rebate (the provision earlier known as section 87A) of up to ₹60,000 cancels the slab tax on income up to ₹12,00,000. For income just above ₹12 lakh, marginal relief caps the tax at the amount by which income exceeds ₹12,00,000, so an income of ₹12,00,001 pays only ₹1 before cess.
Old regime slabs, FY 2026-27
| Slab (below 60) | Rate | Senior (60-79) exemption | Super senior (80+) exemption |
|---|---|---|---|
| 0 to 2,50,000 | 0 per cent | 3,00,000 | 5,00,000 |
| 2,50,001 to 5,00,000 | 5 per cent | 5 per cent above exemption | - |
| 5,00,001 to 10,00,000 | 20 per cent | 20 per cent | 20 per cent |
| Above 10,00,000 | 30 per cent | 30 per cent | 30 per cent |
Standard deduction under the old regime is ₹50,000. A rebate of up to ₹12,500 covers the slab tax on income up to ₹5,00,000, so a reader with a taxable income up to ₹5 lakh pays zero. The old regime still allows HRA exemption, the ₹1.5 lakh aggregate group (the deductions earlier known as 80C), the additional NPS up to ₹50,000 (earlier 80CCD(1B)), home-loan interest up to ₹2 lakh on a self-occupied property and health insurance under the heading earlier called 80D.
Worked example a reader can check
A salaried reader below 60 earns ₹12,75,000 for the year. Under the new regime, standard deduction of ₹75,000 cuts taxable income to ₹12,00,000. Slab tax is zero up to ₹4 lakh, ₹20,000 on the next ₹4 lakh at 5 per cent, and ₹40,000 on the next ₹4 lakh at 10 per cent, which totals ₹60,000. The rebate of ₹60,000 wipes this out; cess is zero; total tax is zero.
Under the old regime on the same input with no deductions, standard deduction of ₹50,000 cuts taxable income to ₹12,25,000. Slab tax is ₹12,500 on 2.5 lakh to 5 lakh at 5 per cent, ₹1,00,000 on 5 lakh to 10 lakh at 20 per cent, and ₹67,500 on 10 lakh to 12.25 lakh at 30 per cent, which totals ₹1,80,000. Cess at 4 per cent is ₹7,200. Total tax is ₹1,87,200. The difference in the two regimes is ₹1,87,200 at this zero-deduction setting.
Rebate, marginal relief and the ₹12 lakh boundary
The new regime rebate removes the slab tax up to ₹12,00,000. Without a marginal relief rule, a reader with an income of ₹12,00,001 would jump from zero tax to ₹60,000, which would make the extra one rupee cost ₹60,000. The relief holds the tax at (taxable income minus ₹12,00,000), so an income of ₹12,00,001 pays ₹1 of slab tax plus 4 per cent cess, which is ₹1.04. The relief fades away as income rises; on an income of ₹12,70,588 the marginal relief and the slab tax meet, and above that the normal slab tax applies.
The old regime rebate removes the slab tax up to a taxable income of ₹5,00,000. It has no marginal relief rule, so an income one rupee above the limit loses the full rebate. In practice the old regime rebate matters only where total deductions bring a reader's taxable income under ₹5 lakh.
Surcharge and the 4 per cent cess
Surcharge is a tax on the slab tax, not on income. The bands are: 10 per cent of slab tax where taxable income is above ₹50 lakh up to ₹1 crore, 15 per cent for ₹1 crore to ₹2 crore, and 25 per cent for ₹2 crore to ₹5 crore. Above ₹5 crore the old regime charges 37 per cent and the new regime is capped at 25 per cent. Each band has its own marginal relief: tax plus surcharge on the income above the threshold shall not exceed the tax plus surcharge at the threshold plus the income above it.
Health and Education Cess is 4 per cent of (slab tax plus surcharge). There is no marginal relief on cess. For a reader whose total tax under the new regime is zero after rebate, cess is also zero. For a reader where surcharge marginal relief applies at a boundary like ₹50 lakh, the cess is computed on the tax and surcharge after that relief.
What this calculator does not cover
- Special-rate income: short-term capital gains, long-term capital gains, dividends above the TDS threshold and winnings. Those use their own rates (STCG 20 per cent, LTCG 12.5 per cent above ₹1,25,000 for equity, surcharge capped at 15 per cent on these heads) and are out of scope here. For a mixed income, compute slab tax here and add special-rate tax separately.
- Agricultural income, which is exempt but affects slab tax via the partial integration rule.
- Non-resident taxation, the new-regime election history for firms and HUFs, AOP and BOI, trust tax, or company tax.
- TDS already deducted and advance tax paid. The output is the liability; the reader subtracts prepaid tax to find the balance payable or refundable.
- Local body professional tax, which is a State levy capped at ₹2,500 per year under Article 276 of the Constitution; see the salary calculator.
A note on section numbers
The Income-tax Act 2025 renumbered many sections. The Act text is still being read against earlier drafts in commentary, so this page uses the readable description of each provision rather than the section number: the rebate is referred to by its effect, the aggregate ₹1.5 lakh group is called by its effect, and so on. The exact section number of each provision under the Income-tax Act 2025 is for a qualified chartered accountant to confirm, so the page avoids citing new Act numbers and uses the plain description of each rule.
Frequently asked questions
Which regime is better for me?
This page does not say which regime to pick; it prints both as arithmetic on your inputs. The new regime has lower slab rates and a ₹75,000 standard deduction, and the rebate zeroes the tax on income up to ₹12 lakh. The old regime has higher rates but allows deductions like HRA, the ₹1.5 lakh aggregate group and home loan interest. A reader with substantial deductions can see the old regime come out lower; without them, the new regime usually prints the lower figure.
What changed under the Income-tax Act 2025?
The Act replaced the 1961 Act from 1 April 2026 for Tax Year 2026-27. Many section numbers were renumbered, and the law was rewritten for readability, but the headline provisions (slab rates, rebate, surcharge, cess, HRA, 1.5 lakh aggregate, home loan interest) carried through. The Finance Act 2026 kept the Budget 2025 slab tables.
How does the rebate work in 2026-27?
Under the new regime, a rebate of up to ₹60,000 cancels the slab tax when taxable income is up to ₹12,00,000. For income just above ₹12 lakh, marginal relief caps the tax at the amount by which income exceeds ₹12,00,000. Under the old regime, a rebate of up to ₹12,500 cancels the slab tax when taxable income is up to ₹5,00,000, with no marginal relief.
What is surcharge marginal relief?
At each surcharge threshold (₹50 lakh, ₹1 crore, ₹2 crore and ₹5 crore), the tax plus surcharge on the income above the threshold shall not exceed the tax plus surcharge at the threshold plus the extra income. Without this rule, one extra rupee could raise the surcharge by several lakh. The new regime surcharge is capped at 25 per cent, so the ₹5 crore step does not add rate for a new-regime filer.
Does this page compute capital gains tax?
No. Short-term and long-term capital gains follow their own special rates (STCG 20 per cent on equity, LTCG 12.5 per cent above ₹1,25,000 for equity, with the surcharge on these heads capped at 15 per cent). This calculator handles normal-rate income only. A reader with capital gains should compute slab tax here and add special-rate tax in a separate step.
What is in the ₹1.5 lakh group?
The deduction earlier known as section 80C combines contributions to EPF employee share, PPF, Sukanya Samriddhi, life insurance premium, ELSS, 5-year tax-saving bank deposits, principal repayment on a home loan, and similar heads. The aggregate cap is ₹1,50,000. It is available only under the old regime. The calculator applies the cap for you if you enter a higher number.
Is HRA exemption available under the new regime?
No. HRA exemption is available only under the old regime, under the provision earlier known as section 10(13A). Enter the exemption you have worked out separately: least of actual HRA received, rent paid minus 10 per cent of salary, and 50 per cent of salary if the reader lives in one of the eight 50 per cent HRA cities under the Income-tax Rules 2026 (Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad) or 40 per cent for any other city. The salary calculator computes HRA exemption from rent, city status and basic.
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