How income tax is calculated in FY 2026-27
For the financial year 2026-27 (assessment year 2027-28), the Union Budget 2026 made no changes to the income tax slabs. The slabs from Budget 2025 continue, and the New Tax Regime remains the default. This tool applies the rules below to both regimes so you can see which results in lower tax for your situation.
Tax is computed in five steps: gross income is reduced by the standard deduction (and other deductions under the old regime); the remaining taxable income is split across the slabs; the Section 87A rebate is applied if you qualify; surcharge is added for high incomes; and finally a 4% Health and Education Cess is added on top.
New Tax Regime slabs — FY 2026-27
The New Regime offers lower rates but removes most deductions. Salaried individuals and pensioners still get a ₹75,000 standard deduction.
| Income slab | 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% |
Old Tax Regime slabs — FY 2026-27
The Old Regime has higher rates but lets you claim deductions like 80C, 80D, HRA and home loan interest. The standard deduction here is ₹50,000. Basic exemption varies by age.
| Income slab (below 60) | 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 (60–80 years) get a basic exemption of ₹3,00,000, and super senior citizens (above 80) get ₹5,00,000. Under the Old Regime, a Section 87A rebate makes income up to ₹5,00,000 tax-free.
Which regime should you choose?
As a rule of thumb, the New Regime wins for most people who don't claim large deductions, thanks to lower rates and the ₹12 lakh rebate. The Old Regime can still win if your combined deductions — 80C, 80D, HRA, home loan interest — exceed roughly ₹3.75–4 lakh. The calculator compares both instantly; a consultant can confirm the best choice for your full situation.
Frequently asked questions
Is income up to ₹12 lakh really tax-free?
Yes, for resident individuals under the New Tax Regime in FY 2026-27. A Section 87A rebate of up to ₹60,000 reduces tax to zero for taxable income up to ₹12,00,000. Salaried individuals get an additional ₹75,000 standard deduction, so a salary up to ₹12,75,000 can mean zero tax.
What is the standard deduction for FY 2026-27?
₹75,000 under the New Regime and ₹50,000 under the Old Regime, for salaried individuals and pensioners. Applied automatically when you select "Salaried / Pensioner".
Can I switch between the old and new regime every year?
Salaried individuals without business income can choose their regime each year while filing. Those with business income face more restrictive rules. A tax consultant can advise on your case.
Is this calculator a substitute for a tax consultant?
No. This is an educational tool that gives estimates only. For filing and personalised advice, consult a qualified Chartered Accountant. Find local consultants for free in the directory above.
Is this result final for filing my return?
It's an accurate estimate based on what you enter and the published slabs. Your final liability can vary with special-rate incomes and specific exemptions. Verify on incometax.gov.in or with a professional before filing.