Income Tax Slabs FY 2026-27: What You Need to Know
Financial Year 2026-27 runs from 1 April 2026 to 31 March 2027. Income earned during this period is assessed in Assessment Year (AY) 2027-28 and the applicable Income Tax Return (ITR) must be filed by the due dates in 2027. When people search for "income tax slabs AY 2026-27," they are often referring to income earned in FY 2025-26 — it is worth keeping that distinction clear before computing your liability.
FY 2026-27 is also the first year administered under the new Income-tax Act, 2025, which came into force on 1 April 2026 and replaces the Income-tax Act, 1961. The slabs, rates, rebate and deduction limits are unchanged — Union Budget 2026 (1 February 2026) left them exactly as set by the Finance Act 2025 — but the section numbering has been recast (for example, the new-regime provision in old Section 115BAC now sits in Section 202, and the Section 87A rebate in Section 156). The new Act also introduces a single "Tax Year" that aligns with the financial year, retiring the separate "Previous Year" and "Assessment Year" labels. We retain the familiar section references below for continuity.
For FY 2026-27, the new tax regime continues as the default regime for individuals, Hindu Undivided Families (HUFs), and most other taxpayers. Opting for the old regime requires an explicit election at the time of filing your ITR (or, for salaried employees, at the beginning of the year with your employer).
This guide covers both regimes side by side, explains when each makes financial sense, lays out corporate tax rates, and lists the key compliance dates for FY 2026-27.
New Tax Regime — Income Tax Slabs for Individuals (FY 2026-27)
The new tax regime offers lower marginal rates and a simplified structure with fewer exemptions. The slabs introduced by the Finance Act 2025 continue unchanged for FY 2026-27 (Budget 2026 made no revisions). They apply as follows for individuals below 60 years of age (rates are the same for senior citizens in the new regime — unlike the old regime, the new regime does not offer a higher basic exemption for older taxpayers).
| Total Income Slab | Tax Rate (New Regime) |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Section 87A Rebate
If your total income does not exceed ₹12,00,000, the Section 87A rebate of up to ₹60,000 wipes out your entire tax liability in the new regime. This means zero tax payable — but the rebate is not available if income exceeds ₹12 lakh even by a rupee (subject to marginal relief).
Standard Deduction
Salaried employees and pensioners can claim a standard deduction of ₹75,000 under the new regime. With this, the effective zero-tax limit for a salaried individual is ₹12,75,000 (gross salary), since taxable income becomes ₹12,00,000 and the 87A rebate applies.
Marginal Relief Example: If your income is ₹12,10,000 under the new regime, the tax computed before rebate is far higher than the ₹10,000 of income above the ₹12 lakh threshold. Because the Section 87A rebate is not available beyond ₹12 lakh, the law provides marginal relief so that the additional tax payable cannot exceed the income earned above ₹12 lakh. In effect you pay only the incremental income as tax until your normal liability catches up. Verify the exact computation with a Chartered Accountant or through the official income tax calculator at incometax.gov.in.
Old Tax Regime — Income Tax Slabs for Individuals (FY 2026-27)
The old tax regime retains the traditional three-tier slab structure with higher rates but preserves access to numerous deductions and exemptions. Unlike the new regime, the old regime differentiates slabs by age.
| Income Slab | Below 60 Years | Senior Citizens (60–80 Yrs) | Super Senior Citizens (80+ Yrs) |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | — | — |
| Up to ₹3,00,000 | — | Nil | — |
| Up to ₹5,00,000 | — | — | Nil |
| ₹2.5L–₹5L / ₹3L–₹5L | 5% | 5% | — |
| ₹5,00,001 to ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
Section 87A under old regime: A rebate of up to ₹12,500 is available if your total income (after deductions) does not exceed ₹5,00,000. This effectively makes income up to ₹5 lakh tax-free under the old regime as well.
Standard deduction under old regime: ₹50,000 for salaried employees and pensioners (unchanged from prior years).
New Regime vs Old Regime — Which Is Right for You?
The breakeven point between the two regimes depends on the quantum of deductions and exemptions you can legitimately claim. Here is a practical comparison.
| Feature | New Tax Regime | Old Tax Regime |
|---|---|---|
| Default status | Default (from FY 2023-24) | Opt-in required |
| Basic exemption limit | ₹4,00,000 (uniform for all ages) | ₹2.5L / ₹3L / ₹5L (by age) |
| Section 87A rebate | ₹60,000 (income ≤ ₹12L) | ₹12,500 (income ≤ ₹5L) |
| Standard deduction | ₹75,000 (salaried/pensioner) | ₹50,000 (salaried/pensioner) |
| Section 80C deduction | Not available | Up to ₹1,50,000 |
| Section 80D (health insurance) | Not available | Up to ₹25,000–₹1,00,000 |
| HRA exemption | Not available | Available |
| Home loan interest (Sec 24b) | Not available for self-occupied | Up to ₹2,00,000 |
| LTA exemption | Not available | Available |
| NPS employer contribution (Sec 80CCD(2)) | Available | Available |
New Regime Is Better When
- Income is up to ₹12–15 lakh with minimal deductions
- No HRA (working from home or own house)
- No large home loan interest or Section 80C investments
- You prefer simplicity over tax planning
- Income primarily from salary or business
Old Regime Is Better When
- You claim HRA + Section 80C (₹1.5L) + 80D + home loan interest together
- Total deductions exceed ₹3–4 lakh
- Income is between ₹10–20 lakh with heavy investments
- You have LTA, professional tax, and other allowances
- Senior citizens with significant medical expenses
Quick Test: Use the Income Tax Department's official tax calculator at incometax.gov.in to compare both regimes with your actual figures before deciding. A Chartered Accountant can also help optimise if your financial profile is complex. WeeDoo can help you locate companies and directors through its free MCA search — useful when your deductions involve business expenses or professional services.
Surcharge and Health & Education Cess (FY 2026-27)
Beyond the base slab tax, two additional levies apply: surcharge (on high incomes) and Health and Education Cess (universal). The surcharge slabs below apply to individuals, with one key difference between regimes: the highest surcharge rate is capped at 25% in the new regime, whereas the old regime retains a top rate of 37% on income above ₹5 crore.
| Total Income | Surcharge (New Regime) | Surcharge (Old Regime) |
|---|---|---|
| Up to ₹50,00,000 | Nil | Nil |
| ₹50,00,001 to ₹1,00,00,000 (₹1 crore) | 10% | 10% |
| ₹1,00,00,001 to ₹2,00,00,000 (₹2 crore) | 15% | 15% |
| ₹2,00,00,001 to ₹5,00,00,000 (₹5 crore) | 25% | 25% |
| Above ₹5,00,00,000 | 25% (capped) | 37% |
Health and Education Cess: 4% on (income tax + surcharge). This applies uniformly to all taxpayers — individuals, firms, and companies alike.
Note on special-rate incomes: The enhanced surcharge above 15% does not apply to income taxable under Sections 111A, 112, 112A and to dividend income — surcharge on these is capped at 15% under both regimes.
Marginal Relief on Surcharge: Where the surcharge causes total tax to exceed the incremental income that triggered it, marginal relief is available to cap the effective surcharge burden.
Corporate Tax Rates in India — FY 2026-27
Corporate tax rates in India have remained broadly stable since the landmark rate cut in September 2019 (Section 115BAA) and the manufacturing incentive in 2019–20 (Section 115BAB). The main recent change is the reduction of the foreign company base rate from 40% to 35% with effect from FY 2024-25. Here is the current rate structure for companies.
| Company Category | Base Rate | Surcharge | Effective Rate (incl. 4% cess) |
|---|---|---|---|
| Domestic company under Sec 115BAA (concessional, no deductions/incentives) | 22% | 10% | 25.17% |
| New domestic manufacturing company under Sec 115BAB (incorporated on/after 1 Oct 2019 and commenced production by 31 Mar 2024) | 15% | 10% | 17.16% |
| Domestic company (regular regime) — turnover ≤ ₹400 crore in FY 2024-25 | 25% | Nil / 7% / 12% | 26% – 29.12% |
| Domestic company (regular regime) — turnover above ₹400 crore | 30% | Nil / 7% / 12% | 31.2% – 34.94% |
| Foreign company | 35% | 2% / 5% | ~37.13% / 38.22% |
Section 115BAB is closed to new entrants. The concessional 15% manufacturing rate required the company to commence manufacturing or production on or before 31 March 2024. That sunset date was not extended, so companies that began production after it cannot opt into 115BAB and are taxed under the normal regime (or 115BAA at 22%). Industry bodies have asked the government to re-introduce the incentive, but no extension has been notified as of mid-2026.
Minimum Alternate Tax (MAT)
Companies opting for Section 115BAA or 115BAB are exempt from MAT. For other companies, MAT is levied at 15% of book profit (plus applicable surcharge and cess) if it exceeds the regular computed tax. MAT credit can be carried forward for 15 years.
Dividend Distribution Tax (DDT)
DDT was abolished from FY 2020-21. Dividends are now taxable in the hands of shareholders at their applicable income tax slab rates. TDS at 10% is deducted by the company on dividends exceeding ₹10,000 per resident shareholder per year (threshold raised from ₹5,000 with effect from FY 2025-26).
For LLPs and partnership firms, the tax rate remains a flat 30% on total income, plus applicable surcharge (12% if income exceeds ₹1 crore) and 4% cess. The effective rate for an LLP with income above ₹1 crore is approximately 34.94%.
Key Deductions Under the Old Tax Regime
If you choose the old regime, these deductions can significantly reduce your taxable income. The combined benefit often makes the old regime more attractive for incomes between ₹10 lakh and ₹30 lakh with adequate investment proof.
Section 80C — Investments and Life Insurance
Deduction up to ₹1,50,000 per year on specified investments: PPF, ELSS mutual funds, LIC premium, NSC, five-year tax-saving FD, Sukanya Samriddhi Yojana, EPF contribution, home loan principal repayment, tuition fees.
Section 80D — Health Insurance Premium
Deduction up to ₹25,000 for self and family (₹50,000 if self or spouse is a senior citizen). Additional ₹25,000–₹50,000 for parents' health insurance. Maximum combined deduction can reach ₹1,00,000.
Section 24(b) — Home Loan Interest
Deduction up to ₹2,00,000 on interest paid for a self-occupied property. No cap for let-out properties (but set-off against other heads is restricted to ₹2 lakh per year; unabsorbed loss can be carried forward for 8 years).
HRA Exemption — House Rent Allowance
Available to salaried employees paying rent. Exemption is the least of: (a) actual HRA received; (b) 50% of basic salary (40% for non-metro cities); (c) actual rent paid minus 10% of basic salary. Requires rent receipts and, above ₹1 lakh p.a., landlord's PAN.
Section 80CCD(2) — NPS Employer Contribution
Employer's contribution to NPS is deductible up to 10% of salary (14% for government employees, and 14% under the new regime). This deduction is available under both old and new regimes, making NPS employer contributions a powerful tax tool regardless of which regime you choose.
Other Notable Deductions (Old Regime)
Section 80TTA (savings bank interest, up to ₹10,000); Section 80TTB (interest for senior citizens, up to ₹50,000); Section 80G (charitable donations, 50%–100% as per category); Section 80E (education loan interest, no cap, 8 years); Section 80EEA (additional home loan interest up to ₹1.5L for first-time buyers on affordable housing, subject to the scheme's sanction window).
Advance Tax Schedule and ITR Filing Deadlines for FY 2026-27
Individuals with tax liability exceeding ₹10,000 (after TDS) in a year must pay advance tax in instalments. Failure to pay advance tax attracts interest under Sections 234B and 234C. Note that senior citizens (above 60 years) with no business income are exempt from advance tax.
| Instalment | Due Date | Cumulative % of Tax Payable |
|---|---|---|
| 1st Instalment | 15 June 2026 | 15% |
| 2nd Instalment | 15 September 2026 | 45% |
| 3rd Instalment | 15 December 2026 | 75% |
| 4th Instalment | 15 March 2027 | 100% |
ITR Filing Due Dates (FY 2026-27 / AY 2027-28):
- Individuals, HUFs, Firms not subject to audit: 31 July 2027
- Tax Audit Report (Form 3CA/3CB + 3CD): 30 September 2027
- Individuals and companies subject to tax audit (ITR): 31 October 2027
- Transfer Pricing cases: 30 November 2027
- Belated or Revised Return: 31 December 2027
Late Filing Fee under Section 234F: ₹5,000 if the return is filed after the due date but on or before 31 December. The fee is restricted to ₹1,000 where total income does not exceed ₹5 lakh. Additionally, interest at 1% per month under Section 234A applies on outstanding tax from the due date until filing.
Annual Information Statement (AIS) and Taxpayer Information Summary (TIS)
The Income Tax Department's AIS provides a comprehensive view of all financial transactions linked to your PAN — salary, interest, dividends, mutual fund redemptions, property sales, foreign remittances, and more. Before filing your ITR for FY 2026-27, always cross-check your AIS on the e-filing portal (incometax.gov.in) against your own records. Discrepancies can be flagged online. The AIS-derived TIS simplifies the pre-fill of ITR forms.
WeeDoo's free MCA search lets you look up any company's CIN, directors, and filing history — handy when you need to verify the identity of any entity that has paid you dividends or professional fees and has deducted TDS.