Income Tax Slabs & Rates for FY 2026-27 — New Regime Explained

Income Tax Slabs & Rates for FY 2026-27 (New Regime)

Here’s the complete, current picture of how individual income is taxed for Tax Year 2026-27 under the default new regime.

Slab Rates

The Rebate That Makes ₹12 Lakh Tax-Free

Under Section 156(2), resident individuals get a rebate of up to ₹60,000 if their total income doesn’t exceed ₹12,00,000. Combined with the ₹75,000 standard deduction for salaried individuals, this effectively means gross salary up to ₹12.75 lakh attracts zero tax — but only for income taxed at slab rates. Capital gains taxed at special rates (like the 12.5% LTCG rate) are excluded from this rebate calculation.

Marginal Relief

Because the rebate creates a cliff at exactly ₹12,00,000, marginal relief ensures that a taxpayer earning slightly above this threshold doesn’t pay disproportionately more tax than someone earning just below it. The additional tax payable is capped at the amount by which income exceeds ₹12,00,000.

Cess & Surcharge

•             Health & Education Cess: A flat 4% is added to the computed tax (before or after rebate, as applicable) in all cases.

•             Surcharge: Applies only to higher income brackets — typically starting at total income above ₹50 lakh, with rates rising in slabs up to 25% for the highest income levels under the new regime (capped lower than the old regime’s peak surcharge).

Worked Example

An individual with ₹15,00,000 taxable income under the new regime:

•             ₹0–4L: Nil

•             ₹4L–8L: 5% of ₹4,00,000 = ₹20,000

•             ₹8L–12L: 10% of ₹4,00,000 = ₹40,000

•             ₹12L–15L: 15% of ₹3,00,000 = ₹45,000

•             Total tax before cess: ₹1,05,000

•             Plus 4% cess: ₹4,200

•             Total tax payable: ₹1,09,200

No rebate applies here since income exceeds ₹12,00,000.

Old Regime Slabs (For Comparison)

Frequently Asked Questions

Q1. Is the ₹12 lakh rebate automatic, or do I need to claim it? It’s computed automatically by the ITR utility and by your employer’s TDS calculation once your income qualifies — no separate claim is needed.

Q2. Does the rebate apply to senior citizens too? Yes, the Section 156(2) rebate under the new regime is available to all resident individuals, regardless of age, as long as total income doesn’t exceed ₹12 lakh.

Q3. Why did my tax not become zero even though my salary is under ₹12.75 lakh? If you have other income taxed at special rates (like capital gains or lottery winnings), that portion doesn’t get the rebate benefit — only slab-rate income is covered.

Rates reflect Tax Year 2026-27. Verify current slabs each Budget, as these are revised periodically.