What applies in FY 2026-27
Budget 2026 kept the previous year’s structure, so FY 2026-27 (AY 2027-28) uses the same numbers — it is also the first “tax year” under the new Income-tax Act, 2025, which renumbers sections but doesn’t change these figures.
New regime (default): nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% in ₹4 lakh steps, and 30% above ₹24 lakh. A Section 87A rebate of up to ₹60,000 means no tax on taxable income up to ₹12 lakh, and salaried people get a ₹75,000 standard deduction — so salary up to ₹12.75 lakh is effectively tax-free.
Old regime: nil up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above, with a ₹50,000 standard deduction and deductions such as 80C, 80D, HRA and home-loan interest.
The rule of thumb
The old regime only wins when your deductions are large. As a rough guide, if your combined deductions (beyond the standard deduction) are below about ₹4–5 lakh, the new regime usually costs less at most income levels. Above that — typically people with high HRA in a metro and a home loan — compare carefully.
The fastest way is to put your real numbers into the income tax calculator, which shows both regimes side by side.
Watch out for
- Marginal relief just above ₹12 lakh: your tax can’t exceed the income above ₹12 lakh, so a small raise never leaves you worse off.
- Special-rate income (like capital gains) doesn’t get the 87A rebate and is taxed separately.
- Switching: salaried taxpayers can choose each year; business income has stricter rules.
> This is general information, not tax advice. Confirm with the Income Tax Department’s portal or a chartered accountant before filing.