For FY 2026-27 (income earned between 1 April 2026 and 31 March 2027) the new tax regime remains the default, with the same slab structure introduced in the 2025 Budget. The big headline: net taxable income up to Rs 12 lakh still pays nothing, thanks to the Section 87A rebate.
New regime slabs for FY 2026-27
| Annual taxable income | Tax rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 - Rs 8,00,000 | 5% |
| Rs 8,00,001 - Rs 12,00,000 | 10% |
| Rs 12,00,001 - Rs 16,00,000 | 15% |
| Rs 16,00,001 - Rs 20,00,000 | 20% |
| Rs 20,00,001 - Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Standard deduction: Rs 75,000 without any proof
Salaried and pension taxpayers subtract an automatic Rs 75,000 before the slabs apply. There is no paperwork - it simply lowers your taxable income. A gross salary of Rs 12.75 lakh therefore maps to taxable income of Rs 12.00 lakh, which lands inside the zero-tax zone below.
The Section 87A rebate: zero tax up to Rs 12 lakh
Under the new regime, the 87A rebate cancels tax of up to Rs 60,000 as long as your net taxable income does not exceed Rs 12 lakh. Combined with the standard deduction, that means a salaried employee earning up to about Rs 12.75 lakh can pay zero income tax. It is a rebate, not a lower slab - cross the threshold and the rebate no longer applies.
Marginal relief just above Rs 12 lakh
Without protection, crossing Rs 12 lakh would add Rs 60,000 of tax overnight. Marginal relief caps your liability so the extra tax never exceeds the income that pushed you past Rs 12 lakh. In practice the relief covers roughly Rs 12 to 12.75 lakh of taxable income; beyond that, normal slabs apply fully.
Worked examples
- Rs 12,00,000 salary: taxable Rs 11,25,000 after the deduction. Tax = Rs 52,500, fully rebated - nil.
- Rs 15,00,000 salary: taxable Rs 14,25,000. Tax = Rs 93,750 + 4% cess = Rs 97,500.
- Rs 50,00,000 other income: taxable Rs 50,00,000. Tax = Rs 10,80,000 + 4% cess = Rs 11,23,200.
Old regime - worth it only with big deductions
The old regime keeps its older slabs (5% above Rs 2.5 lakh, 20% above Rs 5 lakh, 30% above Rs 10 lakh) but allows deductions like 80C, 80D, HRA and home-loan interest, with a Rs 50,000 standard deduction. If your annual deductions top roughly Rs 4-5 lakh, the old regime can win - run both numbers before choosing.
Skip the manual slab maths with the free Income Tax Calculator - pick new or old regime, mark salaried or not, and get tax, cess, effective rate and monthly numbers instantly. Pair it with the Salary Calculator to see how tax shapes your CTC.