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New Income Tax Regime Slabs FY 2026-27: Complete Breakdown
Section 202 of the Income Tax Act 2025 sets out the new tax regime slab rates for financial year 2026-27. These rates apply to every resident individual and HUF unless you filed Form 10-IE to stay in the old regime. Here is what you actually pay.
Tax slabs for FY 2026-27 (new regime)
| Income range (₹) | Tax rate | Tax on this income |
|---|---|---|
| 0 – 4,00,000 | Nil | ₹0 |
| 4,00,001 – 8,00,000 | 5% | 5% of (income − 4,00,000) |
| 8,00,001 – 12,00,000 | 10% | ₹20,000 + 10% of (income − 8,00,000) |
| 12,00,001 – 16,00,000 | 15% | ₹60,000 + 15% of (income − 12,00,000) |
| 16,00,001 – 20,00,000 | 20% | ₹1,20,000 + 20% of (income − 16,00,000) |
| 20,00,001 – 24,00,000 | 25% | ₹2,00,000 + 25% of (income − 20,00,000) |
| Above 24,00,000 | 30% | ₹3,00,000 + 30% of (income − 24,00,000) |
These are pre-rebate rates. Under Section 87A, a full rebate is available for total income up to ₹7 lakh, meaning zero tax for taxpayers whose total income is ₹7 lakh or less after all deductions.
Rebate under Section 87A: the zero-tax ceiling
The rebate under Section 87A of the Income Tax Act 2025 gives a full tax rebate (tax reduced to zero) for individuals with taxable income up to ₹7 lakh. This applies after accounting for the standard deduction and all other deductions available under the new regime.
What this means in practice:
- A salaried employee with gross income of ₹7.5 lakh and the standard deduction of ₹75,000 pays zero tax under the new regime.
- A freelancer with turnover of ₹12 lakh and valid business expenses reducing taxable income to ₹7 lakh also pays zero tax.
The rebate is auto-applied when you file ITR — you do not need to claim it separately.
Standard deduction under the new regime
The standard deduction of ₹75,000 is available to all employees under the new regime. This reduces your gross salary before the slab rates apply. Pensioners receive the same ₹75,000 standard deduction.
For a salaried person earning ₹9 lakh per year:
- Gross salary: ₹9,00,000
- Less: Standard deduction: ₹75,000
- Taxable income: ₹8,25,000
- Tax = nil (up to ₹8 lakh) + 5% of ₹25,000 = ₹1,250
- Less: Rebate 87A = ₹1,250 (because ₹8,25,000 < ₹7,00,000? No — 8,25,000 > 7,00,000, so rebate does NOT fully cancel. Tax payable = ₹1,250)
Wait — that rebate calculation was wrong. Let me redo it correctly:
- Taxable income: ₹8,25,000
- Tax slabs: nil on first ₹4L + 5% on ₹4,25,000 (8,25,000 − 4,00,000) = 5% × ₹4,25,000 = ₹21,250
- Rebate 87A: available only if taxable income ≤ ₹7,00,000. ₹8,25,000 > ₹7,00,000 → rebate does NOT apply.
- Tax payable: ₹21,250
This is why the 87A rebate matters: it zeroes out tax for income up to ₹7 lakh, but the moment you cross ₹7 lakh, you start paying tax at 5% on income above ₹4 lakh.
Surcharge on high incomes
If your total income exceeds ₹50 lakh, a surcharge applies on top of the slab tax:
| Total income | Surcharge rate |
|---|---|
| ₹50 lakh – ₹1 crore | 10% |
| ₹1 crore – ₹2 crore | 15% |
| ₹2 crore – ₹5 crore | 25% |
| Above ₹5 crore | 37% |
The surcharge applies before health and education cess (4%).
Who should use the old regime instead
The new regime is not automatically better for everyone. The old regime allows deductions that the new regime does not:
- Section 80C investments (ELSS, PPF, life insurance premium, home loan principal): up to ₹1.5 lakh per year
- Section 80D health insurance premium: up to ₹25,000 (₹50,000 for senior citizens)
- HRA exemption (if you receive HRA and pay rent): varies
- Section 80CCD(1) NPS contribution: up to ₹50,000 extra
If your total deductions in the old regime exceed approximately ₹3.75 lakh (roughly ₹4.5 lakh in salary with ₹1.5 lakh in 80C savings), the old regime may give a lower tax outgo.
Use the Income Tax Calculator to run both scenarios with your actual numbers.
Sources
- Income Tax Act 2025, Section 202 — new regime slabs (verified 7 October 2026).
- Section 87A rebate — Income Tax Act 2025 (verified 7 October 2026).
- CBDT Income-tax Rules 2026, G.S.R. 198(E), notified 20 March 2026 (verified 7 October 2026).
Related reading
- Income Tax Act 2025 — what changed for Indian taxpayers — overview of the new Act
- How to choose between new and old tax regime — decision framework with examples
- Income Tax Calculator — compare both regimes — enter your salary and deductions