The Slabs Did Not Change. The Entire Law Did. Here Is What Applies to Your Income from April 2026.
Budget 2026 did not touch income tax slab rates. Not one bracket moved. Not one rebate was adjusted. If you are searching for “new tax slabs FY 2026-27,” the honest answer is: they are the same as FY 2025-26.
But something far bigger changed. The Income Tax Act 1961 — the law that governed your taxes for 63 years — was replaced by the Income Tax Act 2025 on April 1, 2026. Every section number is different. Every form number is different. The concept of “Assessment Year” no longer exists.
This guide gives you the complete rate tables for FY 2026-27, the rebate and surcharge math most articles skip, and the structural changes that will actually affect your filing.
New Tax Regime Slabs — FY 2026-27
The new regime under Section 202 (formerly Section 115BAC) is the default regime. You do not need to opt in.
| Taxable Income | Tax Rate | Tax on This Slab |
|---|---|---|
| Up to Rs 4,00,000 | Nil | Rs 0 |
| Rs 4,00,001 – Rs 8,00,000 | 5% | Rs 20,000 |
| Rs 8,00,001 – Rs 12,00,000 | 10% | Rs 40,000 |
| Rs 12,00,001 – Rs 16,00,000 | 15% | Rs 60,000 |
| Rs 16,00,001 – Rs 20,00,000 | 20% | Rs 80,000 |
| Rs 20,00,001 – Rs 24,00,000 | 25% | Rs 1,00,000 |
| Above Rs 24,00,000 | 30% | — |
Total tax on Rs 24 lakh taxable income: Rs 3,00,000 + 4% cess = Rs 3,12,000
Section 87A Rebate
- Taxable income up to Rs 12,00,000 → rebate of Rs 60,000 → zero tax
- Salaried individuals: Rs 75,000 standard deduction → salary up to Rs 12,75,000 = zero tax
- Rebate does NOT apply to capital gains, crypto income, or other special-rate income
Marginal Relief (Rs 12L – Rs 12.75L)
If your taxable income is between Rs 12,00,001 and Rs 12,75,000, marginal relief ensures your tax does not exceed the amount by which income exceeds Rs 12 lakh.
| Taxable Income | Tax Without Relief | Tax With Marginal Relief | You Save |
|---|---|---|---|
| Rs 12,01,000 | Rs 61,500 | Rs 1,040 | Rs 60,460 |
| Rs 12,10,000 | Rs 62,920 | Rs 10,400 | Rs 52,520 |
| Rs 12,25,000 | Rs 65,000 | Rs 26,000 | Rs 39,000 |
| Rs 12,50,000 | Rs 68,640 | Rs 52,000 | Rs 16,640 |
| Rs 12,75,000 | Rs 71,250 | Rs 71,250 | Rs 0 |
Note: Most payroll systems do not apply marginal relief in monthly TDS. You may see over-deduction through the year, recoverable only at ITR filing.
Old Tax Regime Slabs — FY 2026-27
The old regime is available only if you actively opt in. You must file your return by July 31, 2026 to choose old regime — belated returns are forced into new regime.
Individuals Below 60 Years
| Taxable Income | Tax Rate |
|---|---|
| Up to 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% |
Senior Citizens (60–80 Years)
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs 3,00,000 | Nil |
| Rs 3,00,001 – Rs 5,00,000 | 5% |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Super Senior Citizens (80+ Years)
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs 5,00,000 | Nil |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Old regime Section 87A rebate: Rs 12,500 for taxable income up to Rs 5 lakh.
Surcharge Rates — FY 2026-27
Surcharge is levied on income tax (before cess) and varies by regime.
| Total Income | New Regime Surcharge | Old Regime Surcharge |
|---|---|---|
| Up to Rs 50 lakh | Nil | Nil |
| Rs 50L – Rs 1 crore | 10% | 10% |
| Rs 1 crore – Rs 2 crore | 15% | 15% |
| Rs 2 crore – Rs 5 crore | 25% | 25% |
| Above Rs 5 crore | 25% (capped) | 37% |
The surcharge cap at 25% under new regime is one of the strongest reasons high-income earners prefer it. The effective top tax rate:
- New regime: 30% tax + 25% surcharge + 4% cess = 39%
- Old regime: 30% tax + 37% surcharge + 4% cess = 42.74%
Health and education cess remains at 4% on total tax + surcharge in both regimes.
Capital Gains Tax Rates — FY 2026-27
Capital gains are taxed identically in both regimes. Your regime choice does not change these rates.
| Asset Type | Holding Period for LTCG | STCG Rate | LTCG Rate | Exemption |
|---|---|---|---|---|
| Listed equity shares | > 12 months | 20% | 12.5% | Rs 1.25L/year |
| Equity mutual funds | > 12 months | 20% | 12.5% | Rs 1.25L/year |
| Debt mutual funds | Any | Slab rate | Slab rate | None |
| Gold / gold ETFs | > 24 months | Slab rate | 12.5% | None |
| Property | > 24 months | Slab rate | 12.5% (no indexation) | Section 54/54F |
Key rules:
- LTCG exemption of Rs 1.25 lakh is per financial year across all listed equity and equity MF combined
- Long-term capital losses can ONLY offset long-term capital gains — not short-term
- Section 87A rebate does NOT zero out capital gains taxed at special rates
- Indexation benefit on property removed from July 23, 2024 — LTCG flat 12.5%
Tax Computation Examples — FY 2026-27
Example 1: Rs 10 Lakh Salary (Salaried, No Other Income)
| New Regime | Old Regime | |
|---|---|---|
| Gross salary | Rs 10,00,000 | Rs 10,00,000 |
| Standard deduction | Rs 75,000 | Rs 50,000 |
| 80C (EPF + PPF) | Not allowed | Rs 1,50,000 |
| 80D (health insurance) | Not allowed | Rs 25,000 |
| Taxable income | Rs 9,25,000 | Rs 7,75,000 |
| Tax before rebate | Rs 32,500 | Rs 67,500 |
| 87A rebate | Rs 32,500 | Rs 0 |
| Tax after rebate | Rs 0 | Rs 67,500 |
| Cess (4%) | Rs 0 | Rs 2,700 |
| Total tax | Rs 0 | Rs 70,200 |
New regime wins by Rs 70,200. At Rs 10L salary, old regime cannot compete even with full deductions.
Example 2: Rs 20 Lakh Salary (Salaried, Home Loan + Full Deductions)
| New Regime | Old Regime | |
|---|---|---|
| Gross salary | Rs 20,00,000 | Rs 20,00,000 |
| Standard deduction | Rs 75,000 | Rs 50,000 |
| HRA exemption | Not allowed | Rs 2,40,000 |
| 80C | Not allowed | Rs 1,50,000 |
| 80D | Not allowed | Rs 50,000 |
| 80CCD(1B) NPS | Not allowed | Rs 50,000 |
| Home loan Sec 24(b) | Not allowed | Rs 2,00,000 |
| Employer NPS 80CCD(2) | Rs 1,40,000 | Rs 1,40,000 |
| Taxable income | Rs 17,85,000 | Rs 11,20,000 |
| Tax | Rs 1,53,750 | Rs 1,24,800 |
| Cess (4%) | Rs 6,150 | Rs 4,992 |
| Total tax | Rs 1,59,900 | Rs 1,29,792 |
Old regime wins by Rs 30,108 — but only with Rs 6.9 lakh in actual deductions claimed. Without the home loan and HRA, new regime wins.
Example 3: Rs 50 Lakh Salary
| New Regime | Old Regime | |
|---|---|---|
| Taxable income (after deductions) | Rs 47,25,000 | Rs 39,50,000 |
| Tax + surcharge + cess | Rs 11,07,900 | Rs 10,22,100 |
At Rs 50L, old regime wins only with maximum deductions (Rs 8L+). Most earners at this level do not have Rs 8L in genuine deductions. And above Rs 50L, the surcharge differential (25% vs 37%) tilts new regime permanently ahead.
What Changed from FY 2025-26 to FY 2026-27
What Did NOT Change
- All slab rates (both regimes)
- Section 87A rebate limits (Rs 60,000 new / Rs 12,500 old)
- Standard deduction (Rs 75,000 new / Rs 50,000 old)
- Surcharge rates and caps
- Health and education cess (4%)
- Capital gains rates
- Employer NPS deduction (14% of basic+DA)
What DID Change
| Change | FY 2025-26 | FY 2026-27 |
|---|---|---|
| Governing law | Income Tax Act 1961 | Income Tax Act 2025 |
| Year terminology | AY 2026-27 | Tax Year 2026-27 |
| Section 80C reference | Section 80C | Section 123 |
| New regime section | Section 115BAC | Section 202 |
| Total sections in Act | 819 | 536 |
| TDS provisions | 60+ separate sections | 3 sections (392, 393, 394) |
| Salary TDS certificate | Form 16 | Form 130 |
| Non-salary TDS certificate | Form 16A | Form 131 |
| TDS nil declaration | Form 15G / 15H | Form 121 |
| Annual tax statement | Form 26AS | Form 168 |
| Total forms | 399 | 190 |
For the complete section-by-section mapping, read our Income Tax Act 2025 vs 1961 guide.
Deductions Available Under Each Regime — FY 2026-27
New Regime (Section 202)
| Deduction | Limit | Notes |
|---|---|---|
| Standard deduction | Rs 75,000 | Automatic, no proof needed |
| Employer NPS — 80CCD(2) | 14% of basic+DA | Single most powerful deduction |
| Employer EPF | 12% of basic | Tax-free up to combined Rs 7.5L |
| Meal vouchers | Rs 200/meal | ~Rs 1.05L/year (from April 2026) |
| Gift/festival vouchers | Rs 15,000/year | Employer-provided |
| Let-out property interest | No limit | Section 24(b), rental property only |
| Family pension | Rs 25,000 | For pension recipients |
| Gratuity/leave encashment | Exempt on retirement | Limits apply |
| Agniveer corpus | As applicable | Military scheme |
For detailed strategies on maximizing these deductions, read our guide to saving tax under new regime.
Old Regime
All new-regime deductions plus:
| Deduction | Section (New Act) | Limit |
|---|---|---|
| PPF, ELSS, EPF, LIC | Sec 123 (old 80C) | Rs 1,50,000 |
| Health insurance | Sec 125 (old 80D) | Rs 25,000 – Rs 1,00,000 |
| HRA exemption | Schedule II | Based on rent paid |
| Self-occupied home loan interest | Sec 24(b) | Rs 2,00,000 |
| NPS self-contribution | Sec 123 (old 80CCD(1B)) | Rs 50,000 |
| Education loan interest | Sec 127 (old 80E) | No limit, 8 years |
| Donations | Sec 133 (old 80G) | 50% or 100% of amount |
| Savings interest | Sec 128 (old 80TTA) | Rs 10,000 |
| Senior citizen interest | Sec 128 (old 80TTB) | Rs 1,00,000 |
| Medical expenditure (specified) | Sec 126 (old 80DDB) | Rs 40,000 – Rs 1,00,000 |
Who Should Pick Which Regime
| Your Situation | Better Regime | Why |
|---|---|---|
| Salary up to Rs 12.75L | New | Zero tax, no effort |
| Rs 13-15L, no home loan, no HRA | New | Deductions rarely cross break-even |
| Rs 15-20L, home loan + HRA + full 80C/80D | Old | Rs 5.5L+ deductions beat new regime |
| Rs 15-20L, no home loan | New | Hard to gather Rs 5.5L+ deductions |
| Rs 20L+, minimal deductions | New | Lower rates outweigh missing deductions |
| Rs 50L+, any situation | New (usually) | 25% surcharge cap vs 37% |
| Senior citizen with FD income + 80TTB | Old (likely) | Rs 1L interest deduction + higher 80D |
| Freelancer under 44ADA | Calculate both | One-time switch rule — choose carefully |
For the full salary-wise break-even analysis, read our old vs new regime comparison.
For structuring your CTC to reach zero tax above Rs 12.75L, read our zero-tax salary structure guide.
Regime Switching Rules — FY 2026-27
Salaried individuals (no business income): Switch freely between old and new regime every year while filing ITR. No lifetime cap.
Business/professional income (44AD/44ADA): Can switch from new to old regime only once in a lifetime. Once switched back to old, cannot return to new regime. Choose only after projecting income and deductions for 3-5 years.
Critical deadline: File ITR by July 31, 2026 to choose old regime. Belated returns filed after this date are locked into new regime. Missing this date can cost Rs 50,000-1,00,000+ in lost deductions.
Employer communication: Submit Form 124 (formerly Form 10IE) to your employer at the start of the financial year to ensure correct monthly TDS computation.
Five Traps That Catch First-Time Filers in FY 2026-27
1. Assuming Zero Tax Means Zero Filing
Salary up to Rs 12.75L = zero tax. But you still need to file your ITR if your gross total income before deductions exceeds Rs 4 lakh (new regime) or Rs 2.5 lakh (old regime). Not filing can result in a notice under Section 263 (old Section 139).
2. The Capital Gains Rebate Myth
Section 87A rebate does NOT apply to STCG taxed at 20% or LTCG taxed at 12.5%. If you earned Rs 11L salary + Rs 2L in equity STCG, your salary tax is zero but you owe Rs 40,000 on the capital gains.
3. The Payroll TDS Mismatch
Most payroll software computes monthly TDS based on projected annual income. It does not apply marginal relief for incomes between Rs 12-12.75L. You may see Rs 5,000-6,000/month in TDS deducted even though your annual tax liability is zero. This is recovered only as a refund after filing.
4. Old Section Numbers in the New Act
If you reference Section 80C instead of Section 123 in any filing, declaration, or appeal for FY 2026-27 income, it may cause validation errors on the IT portal. The old Act governs FY 2025-26. The new Act governs FY 2026-27. No overlap.
5. The Late Filing Regime Lock
Filing after July 31 forces you into new regime. If old regime saves you Rs 80,000 and you file on August 1, you have effectively paid a Rs 80,000 penalty for being one day late — on top of the standard Rs 5,000 late filing fee.
Quick Reference: Effective Tax Rates Under New Regime
| Gross Salary | Taxable Income | Tax Payable | Effective Rate |
|---|---|---|---|
| Rs 7,00,000 | Rs 6,25,000 | Rs 0 | 0% |
| Rs 10,00,000 | Rs 9,25,000 | Rs 0 | 0% |
| Rs 12,75,000 | Rs 12,00,000 | Rs 0 | 0% |
| Rs 15,00,000 | Rs 14,25,000 | Rs 97,500 | 6.5% |
| Rs 20,00,000 | Rs 19,25,000 | Rs 1,97,600 | 9.9% |
| Rs 25,00,000 | Rs 24,25,000 | Rs 3,18,240 | 12.7% |
| Rs 30,00,000 | Rs 29,25,000 | Rs 4,74,240 | 15.8% |
| Rs 50,00,000 | Rs 49,25,000 | Rs 10,50,240 | 21.0% |
| Rs 1,00,00,000 | Rs 99,25,000 | Rs 25,74,240 | 25.7% |
Assumes salaried individual, no other income, no employer NPS. Tax includes 4% cess. Surcharge applies above Rs 50L.
What This Means for Your Tax Planning in FY 2026-27
If you are in the new regime (most people): Your tax planning is simple. Ensure your employer structures CTC with employer NPS at 14% of basic and meal vouchers. Beyond that, there is little to optimize. Focus energy on investing well rather than saving tax.
If you are in the old regime: You have until July 31, 2026 to file and claim deductions. Ensure 80C is fully utilized (check EPF contribution first — it often consumes most of the Rs 1.5L limit), health insurance is in place for 80D, and home loan interest statements are ready.
If you have capital gains: Remember that LTCG up to Rs 1.25 lakh on equity is tax-free. Harvest gains annually to reset cost basis — this saves Rs 15,625/year at the 12.5% rate.
If you have business income: Think carefully before switching regimes. The one-time switch rule means this decision is permanent.
For everyone: Update your mental references. Section 80C is now 123. Form 16 is now Form 130. “Assessment Year” is dead. The tax law changed — the rates did not.