Income Tax Slabs FY 2026-27
Income tax slabs FY 2026-27 (AY 2027-28): Budget 2025 new regime rates, zero tax up to ₹12 lakh (₹12.75L salaried), old regime rates, 87A rebate, worked examples, and e-commerce seller guide.
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India's income tax system operates on two parallel regimes for FY 2026-27: the new (default) tax regime with significantly revised slabs and a zero-tax threshold of ₹12 lakh, and the old tax regime with higher slab rates but a rich set of deductions. The new regime is the default — you must actively opt for the old regime when filing.
Budget 2025 headline change: New regime slabs were restructured and the Section 87A rebate raised to ₹60,000, making income up to ₹12 lakh effectively zero-tax. Salaried individuals earning up to ₹12.75 lakh gross pay ₹0 income tax.
New Tax Regime — Slabs for FY 2026-27 (AY 2027-28)
The new regime is the default from FY 2023-24 onwards. Budget 2025 revised the slabs significantly:
| Income Range | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction: ₹75,000 for salaried individuals and pensioners.
Section 87A rebate: Full tax rebate up to ₹60,000 for net taxable income up to ₹12 lakh. Effective tax = ₹0 for:
- Non-salaried income ≤ ₹12 lakh
- Salaried gross income ≤ ₹12.75 lakh (after ₹75,000 standard deduction)
Note: The new regime does not allow deductions under Sections 80C, 80D, HRA (10-13A), LTA, or most other Chapter VI-A deductions.
Tax at a Glance — How Much Will You Pay? (New Regime, Salaried)
| Gross Salary | Taxable Income | Income Tax | Cess (4%) | Total Tax |
|---|---|---|---|---|
| ₹7,75,000 | ₹7,00,000 | ₹0 (87A rebate) | — | ₹0 |
| ₹10,00,000 | ₹9,25,000 | ₹0 (87A rebate) | — | ₹0 |
| ₹12,75,000 | ₹12,00,000 | ₹0 (87A rebate) | — | ₹0 |
| ₹15,00,000 | ₹14,25,000 | ₹93,750 | ₹3,750 | ₹97,500 |
| ₹20,00,000 | ₹19,25,000 | ₹1,85,000 | ₹7,400 | ₹1,92,400 |
| ₹25,00,000 | ₹24,25,000 | ₹3,06,250 | ₹12,250 | ₹3,18,500 |
| ₹30,00,000 | ₹29,25,000 | ₹4,57,500 | ₹18,300 | ₹4,75,800 |
Taxable income = Gross salary − ₹75,000 standard deduction. No other deductions apply under new regime.
Old Tax Regime — Slabs for FY 2026-27
| Income Range | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior citizens (60–79 years): basic exemption ₹3 lakh. Super seniors (80+ years): basic exemption ₹5 lakh.
Section 87A rebate (old regime): ₹12,500 rebate for net taxable income up to ₹5 lakh.
Standard deduction (old regime): ₹50,000 for salaried individuals.
Key Deductions Available Under the Old Regime
| Section | What It Covers | Maximum Limit |
|---|---|---|
| 80C | PF, PPF, ELSS, life insurance, home loan principal, school fees | ₹1,50,000 |
| 80CCD(1B) | Additional NPS contribution | ₹50,000 |
| 80D | Health insurance premiums | ₹25,000 (₹50,000 for senior citizens) |
| 80TTA | Interest on savings account | ₹10,000 |
| 80TTB | Interest income for senior citizens | ₹50,000 |
| HRA (Sec 10-13A) | House Rent Allowance | Least of: actual HRA, 50%/40% of salary, rent paid minus 10% of salary |
| Standard deduction | For salaried individuals | ₹50,000 |
| Home loan interest (Sec 24b) | Interest on self-occupied property | ₹2,00,000 |
| LTA (Sec 10-5) | Leave Travel Allowance | Actual travel cost (2 journeys in 4-year block) |
New Regime vs Old Regime — Which is Better?
| Scenario | Likely Better Regime |
|---|---|
| Salaried ≤ ₹12.75 lakh, no large deductions | New regime (zero tax) |
| HRA + maxed 80C + 80D + home loan interest | Old regime (check with calculator) |
| Business income, no HRA or allowances | New regime (lower rates, simpler filing) |
| Income > ₹15 lakh, total deductions < ₹3.75 lakh | New regime |
| Income > ₹15 lakh, total deductions > ₹3.75 lakh | Old regime |
Rule of thumb for the 30% bracket: Total old-regime deductions must exceed roughly ₹3.75 lakh (80C ₹1.5L + NPS ₹50K + 80D ₹25K + home loan interest ₹2L − ₹50K standard deduction difference) to beat the new regime. Most salaried individuals without a home loan will find the new regime cheaper.
Worked Examples
Example 1 — Salaried, ₹15 lakh gross
New regime:
- Gross: ₹15,00,000 − ₹75,000 standard deduction = taxable ₹14,25,000
- Tax: nil on ₹4L + 5% on ₹4L + 10% on ₹4L + 15% on ₹2.25L = ₹0 + ₹20,000 + ₹40,000 + ₹33,750 = ₹93,750
-
- 4% cess = ₹97,500
Old regime (with ₹50K SD, ₹1.5L 80C, ₹50K NPS, ₹25K 80D):
- Gross: ₹15,00,000 − ₹2,75,000 deductions = taxable ₹12,25,000
- Tax: nil on ₹2.5L + 5% on ₹2.5L + 20% on ₹5L + 30% on ₹2.25L = ₹0 + ₹12,500 + ₹1,00,000 + ₹67,500 = ₹1,80,000
-
- 4% cess = ₹1,87,200
→ New regime saves ₹89,700 at ₹15 lakh even with typical deductions.
Example 2 — Salaried, ₹25 lakh gross with home loan
New regime:
- Taxable: ₹25L − ₹75K = ₹24.25L
- Tax: ₹20K + ₹40K + ₹60K + ₹80K + 25%×₹4.25L = ₹2,00,000 + ₹1,06,250 = ₹3,06,250
-
- 4% cess = ₹3,18,500
Old regime (₹50K SD + ₹1.5L 80C + ₹50K NPS + ₹25K 80D + ₹2L home loan interest = ₹4.75L deductions):
- Taxable: ₹25L − ₹4.75L = ₹20.25L
- Tax: nil on ₹2.5L + 5%×₹2.5L + 20%×₹5L + 30%×₹10.25L = ₹12,500 + ₹1,00,000 + ₹3,07,500 = ₹4,20,000
-
- 4% cess = ₹4,36,800
→ New regime saves ₹1,18,300 even with home loan and maxed deductions at ₹25 lakh.
Income Tax for E-commerce Sellers
E-commerce sellers have business income (not salary), so the rules differ in important ways:
Which ITR form to file:
- ITR-4 Sugam — if opting for presumptive taxation under Section 44AD (8% of gross receipts deemed as profit; simplest option for turnover < ₹2 crore)
- ITR-3 — if maintaining regular books of accounts (required if turnover > ₹2 crore or opting out of presumptive scheme)
- ITR-1 (Sahaj) — not available for sellers with business income
TDS under Section 194-O: Marketplaces (Amazon, Flipkart, Meesho, etc.) deduct TDS at 1% on gross sale value at the time of payment. This TDS appears in your Form 26AS and AIS. You claim credit against your final tax liability.
Advance tax obligation: If your estimated tax for the year exceeds ₹10,000, you must pay advance tax:
| Instalment | Due Date | Cumulative % of Annual Tax |
|---|---|---|
| 1st | 15 June | 15% |
| 2nd | 15 September | 45% |
| 3rd | 15 December | 75% |
| 4th | 15 March | 100% |
The 194-O TDS deducted by the marketplace counts towards your advance tax, but sellers with significant profits typically owe additional advance tax on top. Failure to pay advance tax attracts interest under Sections 234B and 234C.
New regime for sellers: Business income is eligible for the new regime. Most deductions (80C, 80D) are unavailable, but Section 44AD's 8% presumptive rate effectively sets your income at 8% of turnover — the new regime's lower slab rates then apply on that amount.
Surcharge and Cess
In addition to basic income tax, the following are levied:
| Income | Surcharge (New Regime) | Surcharge (Old Regime) |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| ₹50 lakh – ₹1 crore | 10% | 10% |
| ₹1 crore – ₹2 crore | 15% | 15% |
| ₹2 crore – ₹5 crore | 25% | 25% |
| Above ₹5 crore | 25% (capped) | 37% |
Health and Education Cess: 4% on (income tax + surcharge) — applicable under both regimes.
Income Tax Return (ITR) Filing Deadlines
| Taxpayer type | Due Date |
|---|---|
| Individuals (not audited) | 31 July |
| Businesses requiring audit | 31 October |
| Transfer pricing cases | 30 November |
| Belated / revised return | 31 December |
Frequently Asked Questions
Q. Can I switch between old and new regime every year? Salaried individuals (with no business income) can switch between regimes every year at the time of filing their ITR. Those with business income can switch only once — once they opt back to the old regime after choosing new, they cannot switch back to new again.
Q. What is the tax on ₹10 lakh income under the new regime for FY 2026-27? For a salaried person: gross ₹10L − ₹75K standard deduction = taxable ₹9.25L. Tax on ₹9.25L = 5%×₹4L + 10%×₹1.25L = ₹20,000 + ₹12,500 = ₹32,500. But the Section 87A rebate covers up to ₹60,000 for income ≤ ₹12L, so the effective tax = ₹0.
Q. Is there any tax on income up to ₹12 lakh under the new regime? Effectively no. The Section 87A rebate of ₹60,000 covers the full tax liability for net taxable income up to ₹12 lakh. For a salaried person earning ₹12.75 lakh gross, the ₹75,000 standard deduction brings taxable income to exactly ₹12 lakh, resulting in zero tax.
Q. What happens if my income is ₹12,00,001 — do I pay tax on just ₹1? No, you pay tax on the full ₹12,00,001 at the applicable rate. The 87A rebate is an all-or-nothing threshold — it only applies if your income is ₹12 lakh or below. At ₹12,00,001, the rebate is unavailable and tax is charged from ₹1 upward. This creates a marginal rate "cliff" just above ₹12 lakh.
Q. Can I claim both standard deduction and 80C under the new regime? No. Under the new regime, the ₹75,000 standard deduction is allowed for salaried individuals, but Section 80C, 80D, HRA, LTA, and most other Chapter VI-A deductions are not available. If you need those deductions to reduce tax, you must opt for the old regime.
Q. What is the tax on e-commerce business income of ₹15 lakh (new regime, ITR-4)? Under Section 44AD presumptive taxation, 8% of ₹15L = ₹1.2L is deemed profit. Tax on ₹1.2L under new regime = nil (below ₹4L basic exemption). If turnover is ₹1 crore, deemed profit = ₹8L; tax = 5%×₹4L = ₹20,000; 87A covers this → ₹0 tax. At ₹2 crore turnover, deemed profit = ₹16L; tax ≈ ₹2.4L after Section 87A exclusion.
Q. My marketplace deducts 1% TDS. Will I get a refund? Yes, if the total TDS deducted (per Form 26AS / AIS) exceeds your final tax liability for the year. File your ITR, claim TDS credit, and the excess will be refunded to your linked bank account after ITR processing. Refunds typically take 2–6 weeks after e-verification of the return.
Q. Does the new regime apply to NRI income from Indian sources? NRIs can opt for the new regime for income earned in India. However, NRIs are not eligible for the Section 87A rebate, so there is no zero-tax threshold for NRIs regardless of income level.
Related Resources
Frequently Asked Questions
What are the income tax slabs for FY 2026-27 under the new tax regime?+
Under the new tax regime for FY 2026-27 (AY 2027-28), income up to ₹4 lakh is nil; ₹4–8 lakh at 5%; ₹8–12 lakh at 10%; ₹12–16 lakh at 15%; ₹16–20 lakh at 20%; ₹20–24 lakh at 25%; above ₹24 lakh at 30%. A standard deduction of ₹75,000 is available. The Section 87A rebate of ₹60,000 makes income up to ₹12 lakh effectively zero-tax.
Which tax regime is better — old or new for FY 2026-27?+
For most salaried individuals, the new regime is better in FY 2026-27 because of the revised slabs and zero-tax threshold of ₹12 lakh. The old regime is worth considering only if your total eligible deductions (80C + HRA + 80D + home loan interest + standard deduction difference) exceed roughly ₹3.75 lakh in the 30% bracket. Run both calculations before filing.
What is the income tax rebate under Section 87A for FY 2026-27?+
Under the new tax regime for FY 2026-27, individuals with net taxable income up to ₹12 lakh get a full rebate under Section 87A (maximum ₹60,000), making their effective tax liability zero. Salaried individuals earning up to ₹12.75 lakh gross also pay zero tax after the ₹75,000 standard deduction. Under the old regime, the rebate is ₹12,500 for income up to ₹5 lakh.
What is the surcharge on income tax for FY 2026-27?+
Surcharge is levied at 10% for income between ₹50 lakh and ₹1 crore; 15% for ₹1–2 crore; 25% for ₹2–5 crore; and 37% for income above ₹5 crore (only under old regime; capped at 25% under new regime). A 4% health and education cess is levied on total tax including surcharge.
Do e-commerce sellers need to pay advance tax?+
Yes. If an e-commerce seller's estimated tax liability for the year exceeds ₹10,000, they must pay advance tax in four instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. Marketplace TDS (Section 194-O at 1%) is deductible against this liability, but sellers with significant profits will almost always owe advance tax beyond the TDS amount.
What ITR form should an e-commerce seller file?+
E-commerce sellers with business income file ITR-3 (if maintaining regular books) or ITR-4 Sugam (if opting for presumptive taxation under Section 44AD — 8% of turnover deemed profit). ITR-1 (Sahaj) is only for salaried individuals with no business income and cannot be used by active sellers.