Income Tax Slabs FY 2026-27 (AY 2027-28) — New Regime, Old Regime, and Who Pays What

✓ Slabs confirmed unchanged after Budget 2026 (presented 1 February 2026) · Verified against Income Tax Act 1961 and Finance Act 2025 · Source: incometax.gov.in

Every financial year, millions of working Indians face the same pair of questions: which income tax slab applies to their salary, and which regime — New or Old — results in lower tax? For FY 2026-27, Budget 2026 made no changes to slab rates under either regime, so the answers are the same as they were for FY 2025-26. But many people are still calculating their tax using outdated slabs, missing the Section 87A rebate they are entitled to, or defaulting to the Old Regime out of habit without actually running the numbers.

This guide gives you every slab, rate, and threshold for FY 2026-27 — with precise tax calculations for five specific income levels (₹8L, ₹10L, ₹15L, ₹20L, ₹30L) so you can find where your salary lands and read off your exact tax without needing to calculate anything yourself.

New Tax Regime Slabs — FY 2026-27 (AY 2027-28)

The 7-slab new regime structure for FY 2026-27 is confirmed by the Income Tax Department as unchanged from FY 2025-26.

Add these to every New Regime calculation

Standard deduction: ₹75,000 for salaried individuals and pensioners — deducted from gross salary before applying slabs. (Not available for self-employed or freelancers.)

Section 87A rebate: ₹60,000 maximum — cancels all slab tax if taxable income is ₹12,00,000 or below. If your taxable income is exactly ₹12,00,000, your slab tax is exactly ₹60,000, which is fully cancelled by the rebate, leaving total tax at ₹0.

Health and Education Cess: 4% on the final tax payable after rebate — applied last.

Old Tax Regime Slabs — FY 2026-27

The Old Regime remains available as an opt-in choice. Its slab structure is also unchanged.

For senior citizens (aged 60–79): Basic exemption is ₹3,00,000 (instead of ₹2,50,000). For super senior citizens (80+): Basic exemption is ₹5,00,000.

Standard deduction: ₹50,000 for salaried individuals (lower than the New Regime's ₹75,000)

Section 87A rebate: ₹12,500 maximum — available only if taxable income is ₹5,00,000 or below

Key advantage of the Old Regime: All Chapter VI-A deductions are available — Section 80C (up to ₹1.5L, now Section 123 under Income Tax Act 2025), 80D (health insurance), HRA exemption under Section 10(13A), home loan interest under Section 24b (up to ₹2L for self-occupied), LTA, NPS under 80CCD(1B) (₹50,000 extra), and more.

Tax Calculations at 5 Income Levels — New Regime

Every calculation below is for a salaried individual under the New Tax Regime for FY 2026-27.

₹8,00,000 gross salary

₹10,00,000 gross salary

₹15,00,000 gross salary

₹20,00,000 gross salary

₹30,00,000 gross salary

Quick Reference — Tax at Every Income Level (New Regime)

Surcharge — Additional Tax for High Incomes

Surcharge is levied on the income tax calculated (not on income itself) when total income exceeds ₹50 lakh.

After adding surcharge, the 4% Health and Education Cess is applied on (income tax + surcharge).

New Regime vs Old Regime — Which Saves More?

The breakeven analysis

The New Regime is better than the Old Regime for most people — but the exact breakeven depends on your income level and total deductions. Here is the definitive comparison:

When the Old Regime can still win (income below ₹13L)

For income between ₹5L and ₹13L gross, the Old Regime can beat the New Regime if you have very high deductions — specifically if your combination of HRA exemption, 80C, 80D, home loan interest, and NPS together exceed approximately ₹4.5L. This is possible for someone in a high-rent metro city with a significant home loan and maximised 80C. At ₹10L income, the New Regime already gives zero tax, so the Old Regime can only match it (never beat it) even with maximum deductions. The Old Regime's main remaining use case is a taxpayer with substantial home loan interest on a let-out property (where interest is unlimited under Section 24) combined with full 80C and HRA in the ₹13–15L income range.

3 Common Mistakes When Reading Income Tax Slabs

1. Thinking your entire income is taxed at the highest slab you enter

This is the most widespread tax misconception in India. If you earn ₹15 lakh taxable, you do not pay 15% on all ₹15 lakh. You pay 0% on the first ₹4L, 5% on the next ₹4L, 10% on the next ₹4L, and 15% only on the final ₹3L that exceeds ₹12L. Your total tax is ₹93,750 — not ₹2,25,000 (which would be 15% on the full amount). Every slab taxes only the income within that specific band.

2. Confusing FY (Financial Year) and AY (Assessment Year)

Income earned in FY 2026-27 (April 2026 to March 2027) is assessed and taxed in AY 2027-28 (April 2027 to March 2028). The ITR you file for this income is filed in AY 2027-28, due July 31, 2027 for most individuals. The slabs described in this article apply to income earned in FY 2026-27 — if you are filing an ITR today (July 2026), you are filing for FY 2025-26 (AY 2026-27), whose slabs are identical to FY 2026-27.

3. Applying the Section 87A rebate to capital gains income

The 87A rebate reduces tax only on income taxed at normal slab rates. If your income includes capital gains — from stocks, mutual fund redemptions, or property sales — the tax on those gains is computed separately at special rates (12.5% LTCG on equity above ₹1.25L, 20% STCG on equity) and the 87A rebate does not apply to those amounts. An investor with ₹8L salary and ₹5L in LTCG on equity might expect zero tax on the full ₹13L — but LTCG tax on equity applies separately on the ₹3.75L above the ₹1.25L annual exemption, even though the slab income from salary qualifies for the rebate.

Frequently Asked Questions

What are the income tax slabs for FY 2026-27 under the New Tax Regime?

The 7-slab new regime structure for FY 2026-27 continues unchanged from FY 2025-26. The slabs are: nil on the first ₹4,00,000; 5% on ₹4,00,001 to ₹8,00,000; 10% on ₹8,00,001 to ₹12,00,000; 15% on ₹12,00,001 to ₹16,00,000; 20% on ₹16,00,001 to ₹20,00,000; 25% on ₹20,00,001 to ₹24,00,000; and 30% on all income above ₹24,00,000. For salaried individuals, a standard deduction of ₹75,000 is applied before these slabs, reducing taxable income. The Section 87A rebate of ₹60,000 eliminates all tax for taxable income up to ₹12,00,000 — meaning salaried employees earning up to ₹12,75,000 gross pay zero income tax. These rates are uniform for all ages under the New Regime — unlike the Old Regime, there is no higher exemption for senior citizens under the New Regime.

Did Budget 2026 change the income tax slabs for FY 2026-27?

No. Budget 2026, presented on 1 February 2026, made no changes to income tax slab rates under either regime. Finance Minister Nirmala Sitharaman retained the existing structure for the second consecutive year, confirming the 7-slab new regime structure introduced in Budget 2025 as the settled framework for the medium term. The standard deduction of ₹75,000, the Section 87A rebate of ₹60,000, the basic exemption limit of ₹4 lakh under the new regime, and the default status of the New Regime all remain unchanged for FY 2026-27. The only tax-related changes announced in Budget 2026 were administrative — extending the revised return deadline to March 31 of the assessment year, and minor changes to TDS provisions — none of which affect the slab rates.

What is the income tax on a ₹15 lakh salary in FY 2026-27?

For a salaried individual earning ₹15,00,000 gross under the New Regime: taxable income after the ₹75,000 standard deduction is ₹14,25,000. Slab calculation: ₹0 on the first ₹4L, ₹20,000 on the next ₹4L at 5%, ₹40,000 on the next ₹4L at 10%, and ₹33,750 on the remaining ₹2.25L at 15% — totalling ₹93,750. Adding 4% Health and Education Cess of ₹3,750 gives a total tax payable of ₹97,500. The effective tax rate is 6.50% on gross salary and 6.84% on taxable income. Monthly TDS deductible is approximately ₹8,125. Under the Old Regime with no deductions, tax would be ₹2,57,400 — ₹1,59,900 more than the New Regime. Even with maximum deductions of ₹4.5L under the Old Regime, tax is ₹1,17,000 — still ₹19,500 more than New Regime. The New Regime wins unconditionally at ₹15 lakh income.

Which is better — New Regime or Old Regime for FY 2026-27?

For most taxpayers, the New Tax Regime is better in FY 2026-27. The analysis is conclusive for income above ₹13 lakh: the Old Regime cannot produce lower tax than the New Regime at any practically achievable deduction level. At ₹10 lakh income, the New Regime gives zero tax versus ₹1,06,600 under the Old Regime with no deductions — and even with full 80C (₹1.5L), Old Regime tax is ₹75,400, still losing to zero. For income between ₹5L and ₹13L, taxpayers with very large deductions (HRA + 80C + home loan interest + 80D + NPS exceeding ₹4.5L) can still benefit from the Old Regime. But this requires all those deduction categories to be simultaneously applicable — a combination increasingly uncommon among younger, urban, mobile professionals whose income is growing faster than their ability to generate eligible Old Regime deductions. Run both calculations with your actual numbers using the income tax calculator above.

What is the basic exemption limit for FY 2026-27?

Under the New Tax Regime, the basic exemption limit for FY 2026-27 is ₹4,00,000 — income up to ₹4 lakh is taxed at nil regardless of any rebate. Under the Old Tax Regime, the basic exemption is ₹2,50,000 for individuals below age 60, ₹3,00,000 for senior citizens aged 60 to 79, and ₹5,00,000 for super senior citizens aged 80 and above. The New Regime does not differentiate by age — the same ₹4 lakh exemption applies to everyone. For filing purposes, if your total income is below the basic exemption limit applicable to your regime and age, you are not required to file an ITR — provided you do not have TDS deducted, foreign assets, or other mandatory filing triggers. Note that the Section 87A rebate and the basic exemption limit are two separate provisions: the exemption eliminates tax at the slab level, while the rebate cancels calculated tax up to ₹60,000 for income up to ₹12 lakh.