Every salaried employee, freelancer, and business owner asks the same question at the start of the financial year. How much tax will I actually pay? In this blog we are going to understand income tax slab rates in India for assessment year 2027-28 in a simple table so that you can compare both regimes and calculate the liability and pick the one that saves you more.
Understanding the income tax slab for FY 2026-27 and FY 2027-28
India taxes individuals on a progressive basis: the more you earn, the higher the rate on each additional slice of income. The income earned in FY 2026-27 is assessed in FY 2027-28, and the income tax slabs for AY 2027-28 are the same rates that apply to FY 2026-27.
Term | Meaning | Period |
Financial Year (FY) | The year in which you earn income | 1 Apr 2026 – 31 Mar 2027 |
Assessment Year (AY) | The year in which that income is assessed and your return is filed | 1 Apr 2027 – 31 Mar 2028 |
Income tax rate in India for FY-2026-27: Key point at a glance
Before going out into detail, here is how the two systems are compared on the basis. The income tax rate in India for FY-2026-27 depends on the regime you pick.
Feature | New Tax Regime (Default) | Old Tax Regime |
Basic exemption limit | Rs. 400,000 | Rs. 250,000 |
Number of slabs | 7 (0% to 30%) | 4 (0% to 30%) |
The top rate applies above. | Rs. 2,400,000 | Rs. 1,000,000 |
Standard deduction (salaried) | Rs. 75,000 | Rs. 50,000 |
Section 87A rebate | Up to Rs. 60,000 | Up to Rs. 12,500 |
Most deductions (80C, 80D, HRA) | Not allowed | Allowed |
Health and education costs | 4% | 4% |
New tax regime for 2026-27
The new tax regime slab for 2026-27 applies to all individuals and HUF, regardless of age, and the new regime is the default unless you opt out.
Add an annual taxable income. | Tax Rate |
Up to Rs. 4,00,000 | Nil |
Rs. 400,001 – Rs. 800,000 | 5% |
Rs. 800,001 – Rs. 1,200,000 | 10% |
Rs. 12,00,001 – Rs. 16,00,000 | 15% |
Rs. 1,600,001 – Rs. 2,000,000 | 20% |
Rs. 2,000,001 – Rs. 24,00,000 | 25% |
Above Rs. 24,00,000 | 30% |
Add a 4% health and education cess on the computed tax, plus a surcharge if income exceeds Rs. 50 lakh.
You can read our blog on: old vs. new tax regime
Old tax regime slabs for FY 2026-27
The old tax regime of 2026-27 varies by age group, because a senior citizen gets a higher tax exemption limit.
Annual Taxable Income | Below 60 Years | 60 to 79 Years (Senior Citizen) | 80 Years and Above (Super Senior Citizen) |
Up to Rs. 2,50,000 | Nil | Nil | Nil |
Rs. 250,001 – Rs. 300,000 | 5% | Nil | Nil |
Rs. 300,001 – Rs. 500,000 | 5% | 5% | Nil |
Rs. 500,001 – Rs. 1,000,000 | 20% | 20% | 20% |
Above Rs. 10,00,000 | 30% | 30% | 30% |
Income tax slabs for 2027-28: surcharges and cess
High earners pay an additional surcharge on the tax amount; the new regime caps the surcharge at 25%, which can make it lighter for every high income.
Total Income | Surcharge (Old Regime) | Surcharge (New Regime) |
Up to Rs. 50 lakh | Nil | Nil |
Rs. 50 lakh – Rs. 1 crore | 10% | 10% |
Rs. 1 crore – Rs. 2 crore | 15% | 15% |
Rs. 2 crore – Rs. 5 crore | 25% | 25% |
Above Rs.5 crore | 37% | 25% |
Tax-free income on the new tax regime.
Many taxpayers misunderstand the tax-free income on the new tax regime. The basic exemption limit is Rs. 4 lakh, but section 87A stretches the effective tax-free limit much further.
Taxpayer Type | Effective Tax-Free Income | How It Works |
Resident individual (non-salaried) | Up to Rs. 12,00,000 | Slab tax is fully cancelled by the rebate. |
Resident salaried individual | Up to Rs. 1,275,000 | Rs. 12 lakh taxable income + Rs. 75,000 standard deduction |
Non-resident individual | Up to Rs. 4,00,000 | Rebates under Section 87A are available only to residents |
Section 87A rebate limit for FY 2026-27
The provision of the section 87A rebate limit for FY 2026-27 is quite different.
Particulars | New Tax Regime | Old Tax Regime |
Income limit for rebate | Up to Rs. 12,00,000 | Up to Rs. 5,00,000 |
Maximum rebate | Rs. 60,000 | Rs. 12,500 |
Applies to | Resident individuals | Resident individuals |
Effect | Zero tax up to the limit | Zero tax up to the limit |
If your income is only slightly above Rs. 12 lakh in the new regime, marginal relief ensures your tax doesn't exceed the income earned above that limit.
Income tax deduction under the old tax regime
The old regime's strength lies in its deductions. If you invest and spend in the right places, your taxable income can fall sharply. Here are the most common income tax deductions under the old tax regime.
Section | What It Covers | Maximum Limit |
Standard deduction | Salaried and pensioners | Rs. 50,000 |
Section 80C | PPF, ELSS, EPF, life insurance premium, tuition fees, 5-year tax-saver FD | Rs 150,000 |
Section 80CCD(1B) | Additional NPS contribution | Rs. 50,000 |
Section 80D | Health insurance premium | Rs 25,000 (Rs 50,000 for senior citizens), plus separate limits for parents |
Section 24(b) | Interest on a home loan for a self-occupied house | Rs 200,000 |
Section 80E | Interest on education loan | No upper limit (up to 8 years) |
Section 80TTA | Savings account interest | Rs 10,000 |
HRA exemption | House rent allowance for salaried tenants | As per HRA rules |
Under the new regime, most of these are unavailable, although the standard deduction and the employer's NPS contribution under Section 80CCD(2) remain allowed.
Income tax calculation for FY 2026-27: worked example
The best way to understand income tax calculation for FY 2026–27 is to see real numbers. The examples below assume a salaried resident individual below 60 years. For the old regime, we assume total deductions as stated in each row.
Example 1: Annual Salary of Rs. 10 Lakh
Step | New Regime | Old Regime |
|---|---|---|
Gross salary | Rs. 1,000,000 | Rs. 1,000,000 |
Standard deduction | Rs. 75,000 | Rs.50,000 |
Other deductions (80C Rs. 1.5L + 80D Rs. 25K) | Not allowed | Rs. 175,000 |
Taxable income | Rs. 925,000 | Rs. 775,000 |
Tax on slabs | Rs. 32,500 | Rs. 67,500 |
Section 87A rebate | Rs. 32,500 | Nil |
Cess at 4% | Nil | Rs. 2,700 |
Total tax payable | Rs. 0 | Rs. 70,200 |
Example 2: Annual Salary of Rs. 15 Lakh
Step | New Regime | Old Regime |
Gross salary | Rs. 1,500,000 | Rs. 1,500,000 |
Standard deduction | Rs. 75,000 | Rs. 50,000 |
Other deductions (80C Rs. 1.5L + NPS Rs. 50K + 80D Rs. 25K + home loan interest ₹2L) | Not allowed | Rs. 425,000 |
Taxable income | Rs. 1,425,000 | Rs. 1,025,000 |
Tax on slabs | Rs. 93,750 | Rs. 120,000 |
Cess at 4% | Rs. 3,750 | Rs. 4,800 |
Total tax payable | Rs. 97,500 | Rs. 124,800 |
Example 3: Annual Salary of Rs. 20 Lakh
Step | New Regime | Old Regime |
Gross salary | Rs. 2,000,000 | Rs. 2,000,000 |
Standard deduction | Rs. 75,000 | Rs. 50,000 |
Other deductions (80C Rs. 1.5L + NPS Rs. 50K + 80D Rs. 25K + home loan interest Rs. 2L) | Not allowed | Rs. 425,000 |
Taxable income | Rs. 1,925,000 | Rs. 1,525,000 |
Tax on slabs | Rs. 185,000 | Rs. 270,000 |
Cess at 4% | Rs. 7,400 | Rs. 10,800 |
Total tax payable | Rs. 192,400 | Rs. 280,800 |
These figures are illustrative. Your actual tax depends on your income sources, deductions, and age.
New vs. Old Tax Regime: Which One Fits You?
The new vs. old tax regime debate comes down to one thing: how much you can claim in deductions. Here is a side-by-side view.
Factor | New Tax Regime | Old Tax Regime |
Tax rates | Lower, spread across more slabs | Higher, but allows deductions |
Deductions and exemptions | Very limited | Extensive (80C, 80D, HRA, home loan interest, and more) |
Paperwork and investment proofs | Minimal | Required |
Best for | Those with few investments or deductions | Those with large, planned deductions |
Default regime | Yes. | No, you must opt for it. |
Rebate limit | Income up to Rs. 12 lakh | Income up to Rs. 5 lakh |
How to Choose the Right Income Tax Regime
If you are wondering how to choose the right income tax regime, follow this simple approach.
Your Situation | Regime That Usually Works Better |
Income up to Rs. 12 lakh (12.75 lakh if salaried) | New regime, since tax is effectively nil |
Few or no investments, no home loan, no HRA claim | New regime |
Total deductions are roughly Rs. 4 to Rs. 5 lakh at an income of Rs. 15 lakh or more. | The old regime may be better. |
Paying home loan interest, HRA, and making full 80C, 80D, and NPS investments | Compare both before deciding. |
Prefer simplicity and no proof submission | New regime |
The steps are straightforward: add up your eligible deductions, compute your tax under both regimes, and pick the lower figure. Salaried taxpayers can switch regimes every year, while business-income earners have limited switching options, so check the rules before opting out.
Common Mistakes to Avoid While Choosing a Regime
Mistake | Why It Hurts | What to Do Instead |
Picking a regime only on rates | Deductions can change the final tax sharply. | Calculate tax under both regimes. |
Forgetting the employer's choice | Wrong TDS may be deducted. | Inform your employer of your chosen regime early. |
Ignoring the 87A rebate | You may overpay tax or invest unnecessarily. | Check your income against the rebate limit. |
Investing only to save tax | Poor products may lock your money. | Invest based on goals, then claim the benefit. |
FAQs
What are the income tax slabs for AY 2027-28?
Income Tax Slabs 2027–28 (Assessment Year 2027–28) mean how much tax the government will charge according to your annual income. Under the New Tax Regime, income up to Rs. 4 lakh is taxed at 0%, Rs. 4–8 lakh at 5%, Rs. 8–12 lakh at 10%, Rs. 12–16 lakh at 15%, Rs. 16–20 lakh at 20%, Rs. 20–24 lakh at 25%, and income above Rs. 24 lakh at 30%.
Is income up to Rs. 12 lakh really tax-free?
Yes, under the new tax regime for FY 2026–27 (AY 2027–28), resident individuals with normal taxable income up to Rs. 12 lakh can pay zero income tax because of the Section 87A rebate. However, this rebate does not apply to tax on certain special-rate income, such as some capital gains. Salaried individuals may also benefit from a Rs. 75,000 standard deduction, making salary income up to Rs. 12.75 lakh effectively tax-free, provided they meet the applicable conditions.
Can I claim 80C in the new regime?
No, you cannot claim section 80C and most other deductions under the new tax regime.
Which is the default regime for FY 2026-27.
The new tax regime is already default.