Income Tax Slab AY 2026-27 India - New vs Old Regime Full Guide
Filing income tax for AY 2026-27 (Financial Year 2025-26)? Budget 2025 brought meaningful changes to the New Regime - wider slabs, a higher standard deduction and a Rs 12 lakh zero-tax threshold. This guide gives you the complete New Regime and Old Regime slabs, the Section 87A rebate, the 4% cess, real examples for different incomes, and a clear answer to the question every salaried Indian asks - which regime should I pick?
Assessment Year vs Financial Year
Financial Year (FY) 2025-26 = the year you earn the income, from 1 April 2025 to 31 March 2026. Assessment Year (AY) 2026-27 = the year you assess and file tax on that income, between April 2026 and 31 July 2026 (for non-audit taxpayers). The slabs below apply to AY 2026-27 returns.
New Regime Tax Slabs AY 2026-27
| Total Taxable Income | Tax Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 to Rs 8,00,000 | 5% |
| Rs 8,00,001 to Rs 12,00,000 | 10% |
| Rs 12,00,001 to Rs 16,00,000 | 15% |
| Rs 16,00,001 to Rs 20,00,000 | 20% |
| Rs 20,00,001 to Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
- Standard deduction: Rs 75,000 for salaried taxpayers and pensioners.
- Section 87A rebate: Full rebate up to Rs 12 lakh taxable income, so tax becomes zero. Effectively Rs 12.75 lakh for salaried after standard deduction.
- Cess: 4% Health and Education Cess on the final tax.
- Deductions NOT allowed: 80C, 80D, HRA, home loan interest on self-occupied property (most popular deductions are unavailable).
Old Regime Tax Slabs AY 2026-27
| Income | Below 60 years | Senior (60 - 79) | Super Senior (80+) |
|---|---|---|---|
| Up to Rs 2,50,000 | Nil | Nil | Nil |
| Rs 2,50,001 to Rs 3,00,000 | 5% | Nil | Nil |
| Rs 3,00,001 to Rs 5,00,000 | 5% | 5% | Nil |
| Rs 5,00,001 to Rs 10,00,000 | 20% | 20% | 20% |
| Above Rs 10,00,000 | 30% | 30% | 30% |
- Standard deduction: Rs 50,000 for salaried.
- Section 87A rebate: Up to Rs 5,00,000 taxable income.
- Cess: 4% on final tax.
- Deductions allowed: 80C (Rs 1.5L), 80D (health insurance), HRA, home loan interest, NPS 80CCD(1B) (Rs 50,000), 80E, 80G and more.
Real Examples - Which Regime Wins?
All examples are for a salaried person below 60.
Example 1: Rs 10 lakh salary, no deductions
New Regime: Taxable after standard deduction = Rs 9.25 lakh. Tax falls under the 87A rebate threshold (Rs 12L), so tax = Rs 0.
Old Regime: Taxable = Rs 9.5 lakh (after Rs 50k standard deduction). Tax = Rs 1,02,500 + 4% cess = approx Rs 1,06,600.
Winner: New Regime saves about Rs 1 lakh.
Example 2: Rs 15 lakh salary, Rs 1.5L 80C + Rs 25k 80D
New Regime: Taxable = Rs 14.25 lakh. Tax slab-wise = Rs 1,03,750 + 4% cess = Rs 1,07,900.
Old Regime: Taxable = Rs 12.75 lakh (after Rs 50k SD + Rs 1.5L 80C + Rs 25k 80D). Tax = Rs 1,95,000 + 4% cess = Rs 2,02,800.
Winner: New Regime by about Rs 95,000.
Example 3: Rs 20 lakh salary, Rs 1.5L 80C + Rs 50k NPS + Rs 25k 80D + Rs 2L home loan interest
New Regime: Taxable = Rs 19.25 lakh. Tax = Rs 2,33,750 + cess = Rs 2,43,100.
Old Regime: Taxable = Rs 15.25 lakh. Tax = Rs 2,70,000 + cess = Rs 2,80,800.
Winner: New Regime by about Rs 38,000. Even with heavy deductions, the wider new slabs win in many cases.
When Does the Old Regime Win?
The Old Regime can still beat the New Regime if your total deductions are very large. A rough rule of thumb:
- If (80C + 80D + HRA + home loan interest + NPS) exceeds about Rs 4 lakh per year, the Old Regime may save more.
- If total deductions are under Rs 2 lakh, the New Regime almost always wins.
- Always run both numbers - the calculator does it in one click.
Surcharge for High Income Earners
| Total Income | Surcharge (New & Old) |
|---|---|
| Above Rs 50 lakh up to Rs 1 crore | 10% |
| Above Rs 1 crore up to Rs 2 crore | 15% |
| Above Rs 2 crore up to Rs 5 crore | 25% |
| Above Rs 5 crore | 25% (New Regime caps surcharge at 25%; Old Regime is 37%) |
Surcharge applies on the tax amount, then 4% cess on (tax + surcharge).
How to Switch Regimes
The New Regime is the default from AY 2024-25 onwards. While filing your ITR, you can choose to opt for the Old Regime instead. Salaried individuals can switch every year at the time of filing. Business owners can switch only once - choose carefully.