Income Tax in India for FY 2026-27: New vs Old Regime, Slabs and the Rs. 12 Lakh Rebate
FY 2026-27 slabs for both tax regimes, how the section 87A rebate makes income up to Rs. 12 lakh tax-free, and a worked new-versus-old comparison for a Rs. 15 lakh salary.
Two regimes, one decision every year
Salaried taxpayers in India can choose between the new tax regime (lower rates, very few deductions) and the old tax regime (higher rates, many deductions and exemptions). The new regime is the default. If you prefer the old one, you have to opt for it, and employees can usually switch each year when they file or when they declare to their employer.
This guide uses the rates for FY 2026-27 (assessment year 2027-28). Budget 2026 left the slabs, rebate, surcharge and cess unchanged from FY 2025-26. Tax rules do change, so confirm the figures on the Income Tax Department website before you file.
New regime slabs for FY 2026-27
| Taxable income | Rate |
|---|---|
| Up to Rs. 4,00,000 | Nil |
| Rs. 4,00,001 to 8,00,000 | 5% |
| Rs. 8,00,001 to 12,00,000 | 10% |
| Rs. 12,00,001 to 16,00,000 | 15% |
| Rs. 16,00,001 to 20,00,000 | 20% |
| Rs. 20,00,001 to 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
Salaried employees get a standard deduction of Rs. 75,000. A 4% health and education cess is added to the tax. A surcharge applies at high incomes: 10% above Rs. 50 lakh, 15% above Rs. 1 crore and 25% above Rs. 2 crore, with marginal relief at each threshold.
The Rs. 12 lakh rebate, explained
Under section 87A, tax is fully rebated if taxable income is Rs. 12,00,000 or less. For a salaried person, taxable income is gross salary minus the Rs. 75,000 standard deduction, so gross salary up to Rs. 12,75,000 means zero tax.
The cliff is softened by marginal relief. If taxable income is just above Rs. 12 lakh, the tax is limited to the amount by which income exceeds Rs. 12 lakh. At Rs. 12,10,000 taxable income, the tax before cess is Rs. 10,000, not the Rs. 61,500 the slab table would give. The relief fades out at about Rs. 12.71 lakh of taxable income, where the normal slab tax first drops below the excess over Rs. 12 lakh; above that, the normal slabs apply.
Old regime slabs (for comparison)
| Taxable income | Rate |
|---|---|
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to 5,00,000 | 5% |
| Rs. 5,00,001 to 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
The old regime has a Rs. 50,000 standard deduction and a smaller section 87A rebate that applies only up to Rs. 5 lakh of taxable income. Its advantage is the list of deductions: section 80C (up to Rs. 1.5 lakh for PPF, EPF, ELSS, life insurance and similar), 80D health insurance premiums, HRA exemption, home loan interest and more.
A worked comparison
Take a salaried employee with gross income of Rs. 15,00,000.
- New regime: taxable income Rs. 14,25,000 after the Rs. 75,000 standard deduction. Slab tax is Rs. 20,000 + Rs. 40,000 + 15% of Rs. 2,25,000 (Rs. 33,750) = Rs. 93,750. With 4% cess the total is Rs. 97,500.
- Old regime, with Rs. 1.5 lakh under 80C: taxable income Rs. 13,00,000 after the Rs. 50,000 standard deduction and 80C. Tax is Rs. 12,500 + Rs. 1,00,000 + Rs. 90,000 = Rs. 2,02,500, and with cess about Rs. 2,10,600.
At this income the new regime is cheaper by over Rs. 1.1 lakh. For the old regime to match it, taxable income would need to fall to roughly Rs. 9.06 lakh, which means about Rs. 5.9 lakh of total deductions including the standard deduction. That is possible with a mix of HRA, home loan interest, 80C and 80D, but it is far from automatic.
The break-even moves with your income and deductions, so run your own numbers rather than relying on this example. As a general pattern, the new regime tends to win when deductions are modest, and the old regime can win for higher earners with large home loan interest, HRA and 80C claims.
What the ToolHive calculator does
Our income tax calculator computes tax under the new regime for FY 2026-27. Enter your gross income, say whether you are salaried, and it applies the standard deduction, slabs, section 87A rebate with marginal relief, surcharge and cess, then shows effective rate and monthly tax. It does not do an old-regime calculation or a side-by-side comparison, so for the old regime, work out your deductions first (see below) and use the slab table above or the Income Tax Department's calculator.
Useful tools for the old-regime inputs
- HRA exemption calculator to find how much of your HRA is exempt.
- Section 80C calculator to see how much of the Rs. 1.5 lakh limit you have used.
- Advance tax calculator if you have income beyond salary.
- CTC to take-home calculator to see what this means for monthly pay.
Common mistakes
- Assuming you must stay in one regime. Salaried employees can generally choose each year. People with business income have stricter switching rules.
- Counting deductions that the new regime does not allow. 80C, 80D and HRA exemption do not apply there.
- Forgetting income outside salary. Interest from savings accounts and fixed deposits, rent and freelance income are taxed at your slab rate and may require advance tax.
- Relying on last year's article. Slabs, rebates and deduction limits change with the Finance Act. Check the date on any tax guide, including this one.
Advance tax in brief
If your tax liability after TDS is Rs. 10,000 or more in a year, advance tax is generally due in instalments on 15 June, 15 September, 15 December and 15 March. Salaried people whose employer deducts the right TDS usually do not need it unless they have other income.
Keep in mind
This article is general information, not tax advice. Use the calculator for planning, then confirm the final figures with a chartered accountant or the official e-filing portal.