Income Tax Slab FY 2026-27 — New Regime Rates, ₹60,000 Rebate & Zero Tax up to ₹12.75 Lakh
Updated: 3 June 2026 | FY 2026-27 / Tax Year 2026-27 | Income-tax Act, 2025
For FY 2026-27 (Tax Year 2026-27 under the Income-tax Act, 2025), the new regime slabs are: ₹0–4L: 0%, ₹4–8L: 5%, ₹8–12L: 10%, ₹12–16L: 15%, ₹16–20L: 20%, ₹20–24L: 25%, above ₹24L: 30%. Section 87A rebate: ₹60,000 (effective zero tax up to ₹12L). Standard deduction ₹75,000 for salaried — so salaried employees earning up to ₹12.75L pay zero tax. Old regime remains available with its existing slabs.
₹12.75 Lakh
Effective zero-tax salary for salaried employees in FY 2026-27.
Gross salary ₹12.75L − ₹75K standard deduction = ₹12L net taxable → ₹60,000 Section 87A rebate → zero tax. No investment required.
Gross salary ₹12.75L − ₹75K standard deduction = ₹12L net taxable → ₹60,000 Section 87A rebate → zero tax. No investment required.
New Regime Tax Slabs — FY 2026-27 (Income-tax Act, 2025)
| Income Range | Tax Rate | Tax on Slab | Cumulative Tax |
|---|---|---|---|
| ₹0 – ₹4,00,000 | 0% | ₹0 | ₹0 |
| ₹4,00,001 – ₹8,00,000 | 5% | ₹20,000 | ₹20,000 |
| ₹8,00,001 – ₹12,00,000 | 10% | ₹40,000 | ₹60,000 |
| ₹12,00,001 – ₹16,00,000 | 15% | ₹60,000 | ₹1,20,000 |
| ₹16,00,001 – ₹20,00,000 | 20% | ₹80,000 | ₹2,00,000 |
| ₹20,00,001 – ₹24,00,000 | 25% | ₹1,00,000 | ₹3,00,000 |
| Above ₹24,00,000 | 30% | — | — |
Add 4% Health & Education Cess on total tax. Surcharge applies above ₹50L. Section 87A rebate of ₹60,000 reduces tax to zero for income ≤ ₹12L (new regime).
Zero Tax Calculation — Salaried Employee FY 2026-27
| Step | Amount |
|---|---|
| Gross Salary | ₹12,75,000 |
| Less: Standard Deduction (Section 16) | − ₹75,000 |
| Net Taxable Income | ₹12,00,000 |
| Tax on ₹12L (new regime slabs) | ₹60,000 |
| Less: Section 87A Rebate | − ₹60,000 |
| Total Tax Payable | ₹0 |
Old Regime Slabs — FY 2026-27 (Unchanged)
| Income Range | Tax Rate |
|---|---|
| ₹0 – ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Old regime: Standard deduction ₹50,000. Section 87A rebate ₹12,500 if income ≤ ₹5L. Allows deductions: 80C (₹1.5L), 80D, HRA, home loan interest (₹2L), 80CCD(1B) NPS (₹50K), 80G, etc.
Surcharge Rates — FY 2026-27
| Net Taxable Income | Surcharge (New Regime) | Surcharge (Old Regime) |
|---|---|---|
| Up to ₹50,00,000 | Nil | Nil |
| ₹50,00,001 – ₹1,00,00,000 | 10% | 10% |
| ₹1,00,00,001 – ₹2,00,00,000 | 15% | 15% |
| ₹2,00,00,001 – ₹5,00,00,000 | 25% (capped) | 25% |
| Above ₹5,00,00,000 | 25% (capped) | 37% |
Plus 4% Health & Education Cess on (tax + surcharge). New regime caps surcharge at 25% — reducing peak effective rate vs old regime's 42.74%.
New vs Old Regime Comparison — FY 2026-27
| Gross Income | New Regime Tax | Old Regime (with ₹3.75L deductions) | Suggested Regime |
|---|---|---|---|
| ₹10,00,000 | ₹0 (87A) | ₹32,500 | New |
| ₹12,75,000 | ₹0 (salaried, 87A) | ₹52,000 | New |
| ₹15,00,000 | ₹1,09,200 | ₹78,000 | Old (if deductions ≥ ₹3.75L) |
| ₹20,00,000 | ₹2,08,000 | ₹1,60,000 | Old (if deductions ≥ ₹5L) |
| ₹30,00,000 | ₹5,20,000 | ₹5,72,400 | New |
Frequently Asked Questions
What are the income tax slabs for FY 2026-27 under the new regime?
New regime tax slabs for FY 2026-27 (Tax Year 2026-27, Income-tax Act 2025): ₹0–4 lakh: 0%, ₹4–8 lakh: 5%, ₹8–12 lakh: 10%, ₹12–16 lakh: 15%, ₹16–20 lakh: 20%, ₹20–24 lakh: 25%, above ₹24 lakh: 30%. Standard deduction ₹75,000 for salaried employees. Section 87A rebate: ₹60,000 for income ≤ ₹12 lakh — effectively zero tax up to ₹12.75L for salaried. New regime is the default.
What is the Section 87A rebate for FY 2026-27?
Section 87A rebate for FY 2026-27 is ₹60,000 under the new regime for total income up to ₹12 lakh. This enhanced rebate (up from ₹25,000 in FY 2025-26) under the Income-tax Act 2025 effectively makes income up to ₹12 lakh tax-free. For salaried individuals: gross salary ₹12.75 lakh − ₹75,000 standard deduction = ₹12L net taxable → 87A rebate → zero tax. Old regime rebate remains ₹12,500 for income ≤ ₹5L.
What is the surcharge on income tax for FY 2026-27?
Surcharge rates for FY 2026-27: Income ₹50L–₹1Cr: 10%; ₹1Cr–₹2Cr: 15%; ₹2Cr–₹5Cr: 25% (new regime, capped); above ₹5Cr: 25% (new regime, capped). Old regime: surcharge above ₹5Cr is 37% (not capped). Health & Education Cess: 4% on (tax + surcharge) for all taxpayers. Marginal relief is available at surcharge thresholds to prevent disproportionate tax jumps.
Should I choose old regime or new regime for FY 2026-27?
New regime is beneficial if total deductions are below the break-even point (approximately ₹4–5 lakh for most income levels). New regime advantages: zero tax up to ₹12.75L (salaried), lower rates on higher slabs (25% vs 30%), no requirement for investments. Old regime is better if you have: HRA ₹1.5L+ AND 80C ₹1.5L AND 80D ₹25K AND home loan interest ₹2L = total ₹5.25L deductions. Use TaxClue's Old vs New Regime Calculator to compare your specific situation.
What is the difference between FY 2026-27 and Tax Year 2026-27 under the new Income-tax Act?
Under the Income-tax Act, 2025 (which replaces the Income-tax Act, 1961), the terminology has changed: "Tax Year 2026-27" is the new term for what was previously called "Financial Year 2026-27 / Assessment Year 2027-28." The Tax Year concept aligns the year of income with the year of assessment — income earned in Tax Year 2026-27 (April 2026–March 2027) is taxed in the same year, with returns filed by July 31, 2027.
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