For the financial year (FY) 2026-27, the New Tax Regime is the default, income up to ₹4 lakh is tax-free and tax rates gradually increase as income rises going up to 30% for income above ₹24 lakh. The new tax regime offers more tax slabs with lower tax rates.
Getting a good grasp of income tax slabs in India for the financial year 2026-27 is very important for every taxpayer, whether they are a salaried employee, freelancer or business owner. The government announces tax rules annually in the Union Budget, and these rules determine how much tax Indian citizens need to pay based on their income. For the financial year 2026-27, the government has largely continued with the new tax regime, which aims to simplify the tax structure and reduce the need for multiple deductions and exemptions, making them less complicated for people.
The new tax regime offers more income tax slabs in India with lower tax rates, making it easier for people to calculate their tax liability. For the financial year (FY) 2026-27, the New Tax Regime is the default; income up to ₹4 lakh is tax-free, and tax rates gradually increase as income rises, going up to 30% for income above ₹24 lakh. Also, eligible taxpayers can claim a rebate under Section 87A, which allows them to reduce the tax liability to zero for taxable income up to ₹12 lakh. The new system allows fewer deductions and exemptions, but it also compensates with simpler tax slabs and lower rates. Due to this simplicity, a large number of taxpayers have already shifted to the new regime.
Latest Income Tax Slabs in India FY 2026-27 Under New Tax Regime
The New Tax Regime is the default tax system as per Section 115BAC in India for FY 2026-27. It includes lower and revised tax rates across wider slabs, a ₹75,000 standard deduction for salaried individuals, and no tax on income up to ₹12 lakh due to a ₹60,000 rebate. Let’s take a look at the latest Income Tax slabs in India, FY 2026-27, under the new tax regime: -
| Income Tax Slabs in India FY 2026-27 (New Tax Regime) |
| Annual Taxable Income (₹) |
Tax Rate |
| Up to ₹4,00,000 |
Not Applicable |
| ₹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% |
Key Features of the New Tax Regime
The New Tax Regime for Financial Year 2026-27 offers lower income tax rates and simplified compliance, which acts as the default option with no tax on income up to ₹12 lakh. However, it doesn’t allow most exemptions, such as 80C, 80D, LTA and HRA, but offers a ₹75,000 standard deduction for salaried people. Let’s take a look at the features of the new tax regime: -
1. Higher Tax-Free Limit
As per the new tax regime, total income up to ₹12 lakh is tax-free due to the enhanced Section 87A rebate. This means that no tax is payable if income does not exceed this amount for salaried people and pensioners.
2. Standard Deduction
Salaried individuals and pensioners can claim a standard deduction of ₹75,000, raising the effective tax-free income limit to ₹12.75 lakh. The new regime is applied by default for people, requiring no proactive selection.
3. Limited Deductions Allowed
The new tax regime doesn’t allow deductions such as 80C, 80D, LTA and HRA along with life insurance costs. However, there will be a deduction on employer contributions to an employee's NPS Vatsalya account.
How is the New Tax Regime Different from the Old Tax Regime?
The New Tax Regime has lower tax rates and simplified slabs but eliminates most deductions, such as 80C and HRA, whereas the Old Tax Regime has higher rates but allows a good number of deductions. The new regime has a higher rebate limit up to ₹7 lakh income, along with a standard deduction of ₹75,000. This makes it better for lower-investment and higher-income earners. Let’s understand how the new tax regime is different from the old tax regime: -
1. Tax Rates and Slabs
The New Tax Regime generally provides lower tax rates across various income brackets to reduce the immediate tax burden. The Income Tax Bill also has lower tax rates, wider slabs and no deductions. However, the old regime offers higher rates but allows for many deductions.
2. Deductions and Exemptions
The new income tax regime doesn’t allow over 70 deductions, such as Section 80C, 80D and House Rent Allowance. The old tax regime encouraged these deductions and savings-linked investments. It also has higher tax rates.
3. Standard Deduction
The new tax regime now allows a standard deduction of ₹75,000 for salaried employees and pensioners. But the old tax regime allowed deduction only up to ₹50,000. This caused many people to shift to the new tax regime.
4. Tax Rebate
The new tax regime offers a significantly higher tax rebate under Section 87A, which makes incomes up to ₹12 lakh tax-free. However, the old tax regime keeps the rebate at ₹12,500 with a tax-free threshold of Rs. 5 lakhs.
What is Section 87A Rebate?
Section 87A of the Income Tax Act provides a tax rebate to taxpayers with lower taxable income. This reduces their tax liability to zero if their total income is within specified limits. For FY 2026-27, the tax rebate is up to ₹7 lakh along with a standard deduction of ₹75,000. Let’s take a look at the details of the section 87A rebate: -
- Eligibility: Must be a resident individual. NRIs and HUFs are not eligible for this facility.
- Income Limit: Rebate is only available if the total taxable income is more than ₹7,00,000.
- Application: It is applied to the total tax before adding the 4% Health and Education Cess.
- Exclusions: The 87A rebate is not applicable to special income taxed at special rates, such as long-term capital gains as per section 112A.
Income Tax Slabs for Senior Citizens Under New Tax Regime
For the financial year 2026-27, senior citizens aged between 60 and 80 years have a higher basic exemption of ₹4 lakh under the new tax regime. Let’s take a look at the income tax slabs for senior citizens under the new tax regime: -
| Income Tax Slabs for Senior Citizens |
| Annual Income (₹) |
Tax Rate |
| Up to ₹4,00,000 |
0% |
| ₹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% |
Income Tax Slabs for Women Under New Tax Regime
Income tax rules are the same for both women and men, and there are no separate income tax slabs in India for women. The new tax regime is the default option and offers an exemption upto ₹4 lakh. However, women who are 60 years or older qualify as senior citizens and receive a higher basic exemption limit of ₹3 lakh or more, depending on the tax regime they choose.
Income Tax Slabs for NRIs Under New Tax Regime
NRIs can choose between the old tax regime and the new tax regime in India. The income tax slabs in India for NRIs are the same as Indian resident taxpayers. Under the new tax regime, the basic exemption limit is ₹4 lakh. whereas under the old tax regime, the limit is ₹2.5 lakh. However, NRIs do not receive a higher basic exemption limit for senior citizenship under the old tax regime. This benefit is available only to resident taxpayers.
Income Tax Slabs for HUF Under New Tax Regime
For the financial year 2026-27, the basic exemption limit is ₹2.5 lakh under the old tax regime and ₹4 lakh under the new tax regime. HUFs are allowed to claim various deductions such as 80C, 80D and 80G. They can also take deductions for home loan interest under Section 24(b). An additional deduction can also be claimed for medical insurance under Section 80D. In this scenario, tax is calculated on the income that surpasses the exemption limit, and a 4% health and education cess is added to the final tax amount.
Conclusion
For the financial year 2026-27, the government has come up with new Income tax slabs in India under the new tax regime, which aims to simplify the tax structure and reduce the need for multiple deductions and exemptions. The new tax regime proves to be less complicated for people as compared to the old tax regime. The new tax regime offers lower income tax rates, allows a standard deduction of ₹75,000 and wider slabs and no deductions. The news tax regime applies to both men and women. However, senior citizens have a higher basic exemption of ₹4 lakh, and this facility can’t be utilised by NRIs.