For FY 2026-27, the new tax regime uses seven income-tax slabs, starting with 0% up to ₹4 lakh and reaching 30% on income above ₹24 lakh.
The slab rates are 5%, 10%, 15%, 20%, 25% and 30% across the higher income ranges. This structure remains unchanged from FY 2025-26, as confirmed by the Union Budget 2026.
FY 2026-27 covers income earned from 1 April 2026 to 31 March 2027, while the corresponding assessment year is AY 2027-28.
This guide explains the slab rates, Section 87A rebate, standard deduction, tax calculation and the points that can change the final tax payable.
New Tax Regime Slabs for FY 2026-27
The new regime follows a progressive tax system. Different portions of taxable income are taxed at different rates, so moving into a higher slab does not mean that the entire income is suddenly taxed at the higher rate.
The applicable slab structure is:
| Taxable Income | Tax Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh–₹8 lakh | 5% |
| ₹8 lakh–₹12 lakh | 10% |
| ₹12 lakh–₹16 lakh | 15% |
| ₹16 lakh–₹20 lakh | 20% |
| ₹20 lakh–₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
These rates are the new-regime slab rates for FY 2026-27 as confirmed by Budget 2026.
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New Tax Regime Slabs FY 2026-27
How the Slabs Work
Suppose taxable income is ₹15 lakh. The entire ₹15 lakh is not taxed at 15%.
Instead, the calculation works progressively:
- First ₹4 lakh: Nil
- Next ₹4 lakh: 5% = ₹20,000
- Next ₹4 lakh: 10% = ₹40,000
- Remaining ₹3 lakh: 15% = ₹45,000
The basic slab tax in this example is therefore ₹1,05,000 before considering any applicable rebate, surcharge or cess.
What Is Taxable Income?
Tax is generally calculated on taxable income, rather than simply applying the slab rates to gross salary.
For example, an eligible salaried individual may receive a standard deduction before arriving at taxable income. Other adjustments or deductions can apply depending on the taxpayer’s income and the provisions available under the new regime.
Income taxed under special provisions may also need a separate calculation rather than being treated entirely as normal slab-rate income.
Section 87A Rebate Under the New Tax Regime
Section 87A provides a tax rebate to eligible resident individual taxpayers. Under the new regime, the rebate can be up to ₹60,000 when taxable income does not exceed ₹12 lakh.
The rebate is applied against the income tax calculated under the applicable rules. It is not an additional deduction from taxable income.
Who Can Claim the Rebate?
The rebate is available to eligible resident individuals, subject to the applicable conditions. It is not a general rebate available to every taxpayer or every category of income.
Special-rate income needs particular attention. The rebate is not available against income taxed at special rates, such as capital gains, winnings from lotteries, or income from virtual digital assets.
Does ₹12 Lakh Income Mean Zero Tax?
For an eligible resident individual whose taxable income falls within the Section 87A limit and whose income qualifies for the rebate, the rebate can eliminate the normal slab-rate income tax.
However, it is better not to treat ₹12 lakh as a universal zero-tax threshold for every type of income. Special-rate income and other conditions can change the calculation.
Standard Deduction and Taxable Income
Eligible salaried individuals and pensioners can claim a ₹75,000 standard deduction under the new regime. The deduction reduces taxable salary or pension income before the slab-rate calculation.
For example, consider a salaried individual with gross salary of ₹12.75 lakh and no other taxable income. After a ₹75,000 standard deduction, the taxable income becomes ₹12 lakh.
If the taxpayer satisfies the Section 87A conditions, the applicable rebate can then reduce the normal income-tax liability to zero.
The calculation can be viewed as:
Gross salary → Standard deduction → Taxable income → Slab tax → Section 87A rebate, if eligible → Cess/surcharge where applicable → Final liability
The standard deduction and Section 87A rebate perform different functions. The standard deduction reduces taxable income, while the rebate reduces eligible tax calculated on that income.
New Regime Tax Calculation Example for FY 2026-27
Consider a salaried individual with:
- Gross salary: ₹15,00,000
- Standard deduction: ₹75,000
- Other taxable income: Nil
Step 1: Calculate taxable income
₹15,00,000 − ₹75,000 = ₹14,25,000
The taxable income is therefore ₹14.25 lakh.
Step 2: Apply the new-regime slabs
| Portion of Taxable Income | Rate | Tax |
|---|---|---|
| First ₹4 lakh | 0% | ₹0 |
| Next ₹4 lakh | 5% | ₹20,000 |
| Next ₹4 lakh | 10% | ₹40,000 |
| Remaining ₹2.25 lakh | 15% | ₹33,750 |
| Total tax before cess | ₹93,750 |
The taxpayer’s taxable income exceeds ₹12 lakh, so the Section 87A rebate would not apply.
Step 3: Add Health and Education Cess
The Health and Education Cess is 4% of income tax plus applicable surcharge, if any.
For this example:
₹93,750 × 4% = ₹3,750
Therefore:
₹93,750 + ₹3,750 = ₹97,500
The illustrative tax liability is ₹97,500, assuming no other adjustments, special-rate income, surcharge or tax credits affect the calculation.
New Regime vs Old Regime: What Matters?
The slab table alone does not determine which tax regime is better for every taxpayer.
The new regime generally provides a simpler slab structure with fewer deductions and exemptions, while the old regime provides access to a broader range of deductions and exemptions subject to the applicable conditions.
For example, deductions such as Section 80C and certain exemptions commonly associated with the old regime are generally not available in the same way under the new regime.
The standard deduction, however, is available under the new regime for eligible salaried taxpayers and pensioners.
Taxpayers with substantial eligible deductions may therefore need to compare both regimes instead of looking only at the headline slab rates.
Who Should Pay Attention to the FY 2026-27 Slabs?
Salaried Individuals
Salaried taxpayers should look at their gross salary, standard deduction and resulting taxable income rather than comparing salary directly with the tax slabs.
For example, a gross salary of ₹12.75 lakh is not automatically the same as ₹12.75 lakh of taxable income when an eligible ₹75,000 standard deduction applies.
Self-Employed and Business Taxpayers
Individuals with business or professional income can have additional rules when choosing or changing tax regimes.
Their tax calculation may also involve business income, eligible expenses and other provisions that do not arise in a simple salary example.
Because of these differences, a business taxpayer should not assume that a salary-based example will produce the same result for their own return.
Taxpayers With Special-Rate Income
Capital gains and certain other categories of income can be subject to special tax rates.
Such income should not simply be added to normal slab-rate income and treated as though the same rate applies to everything.
The Section 87A rebate also has restrictions concerning special-rate income, so taxpayers with such income need to calculate their liability separately where applicable.
How to Calculate Tax Under the New Regime
A practical calculation can follow these steps:
Step 1: Calculate total income. Include the relevant income sources such as salary, business or professional income, house property income and other sources.
Step 2: Identify eligible deductions and adjustments. For an eligible salaried taxpayer, this can include the ₹75,000 standard deduction.
Step 3: Arrive at taxable income. This is the amount to which the normal slab rates are applied, subject to special-rate provisions.
Step 4: Apply the slab rates. Calculate tax separately for each applicable income range.
Step 5: Check Section 87A eligibility. An eligible resident individual with taxable income within the applicable limit may claim the rebate of up to ₹60,000 under the new regime.
Step 6: Check surcharge, if applicable. Higher-income taxpayers can be subject to surcharge according to the applicable thresholds and rates.
The maximum new-regime surcharge rate is 25% for the general surcharge structure.
Step 7: Add Health and Education Cess. The cess is 4% of income tax plus applicable surcharge.
An official income-tax calculator can then be used to cross-check the calculation before filing.
Key Takeaways
- The new regime has slab rates ranging from 0% to 30%, with the basic exemption level at ₹4 lakh.
- The higher rates apply progressively to the relevant portions of taxable income rather than to the entire income.
- Eligible resident individuals can receive a Section 87A rebate of up to ₹60,000 when taxable income does not exceed ₹12 lakh, subject to the applicable conditions.
- Eligible salaried individuals and pensioners can claim a ₹75,000 standard deduction under the new regime.
- Special-rate income, such as certain capital gains, can require a separate tax calculation and may not receive the same rebate treatment.
- The final tax liability can also depend on surcharge, cess, tax credits and the taxpayer’s specific income profile.
Frequently Asked Questions
What are the new tax regime slabs for FY 2026-27?
The new regime has a 0% rate up to ₹4 lakh, followed by 5%, 10%, 15%, 20%, 25% and 30% rates across progressively higher income ranges. The highest 30% slab applies to income above ₹24 lakh.
What is the income tax slab for FY 2026-27 under the new regime?
The slab structure starts at nil tax up to ₹4 lakh. Income between ₹4 lakh and ₹8 lakh is taxed at 5%, ₹8 lakh to ₹12 lakh at 10%, and the rates increase progressively until the 30% rate applicable above ₹24 lakh.
Is tax zero under the new regime below the Section 87A rebate limit?
An eligible resident individual with taxable income up to ₹12 lakh can receive a Section 87A rebate of up to ₹60,000, potentially reducing the normal income-tax liability to zero.
Special-rate income is subject to separate rules, so the ₹12 lakh figure should not be treated as a universal threshold for every type of income.
How is taxable income calculated under the new tax regime?
Taxable income depends on the taxpayer’s income sources and eligible deductions or adjustments.
For an eligible salaried individual, the ₹75,000 standard deduction is an important adjustment before applying the normal slab rates. Special-rate income may need separate treatment.
Is the standard deduction available under the new tax regime for FY 2026-27?
Yes. Eligible salaried individuals and pensioners can claim a ₹75,000 standard deduction under the new regime. This can reduce taxable income and may affect whether a taxpayer falls within the Section 87A rebate threshold.
Disclaimer
This article is provided for general educational and informational purposes and is not professional tax, legal or financial advice.
Tax liability can vary according to individual income, deductions, special-rate income and other applicable provisions.
