What is the standard deduction for Tax Year 2026-27?

For Tax Year 2026-27, the statutory standard deduction for salaried employees and pensioners is ₹75,000 under the New Tax Regime and ₹50,000 under the Old Tax Regime.

Which tax regime is the default for Tax Year 2026-27?

The New Tax Regime is the default statutory framework in India for Tax Year 2026-27 under the Income Tax Act, 2025. Taxpayers who wish to file under the Old Tax Regime must exercise the opt-out option when filing their return.

What is the Section 87A tax rebate limit for Tax Year 2026-27 under the New Regime?

Under the New Tax Regime for Tax Year 2026-27, resident individuals with net taxable income not exceeding ₹12,00,000 receive a tax rebate under Section 87A up to ₹60,000, reducing their net tax liability to ₹0.

How does marginal relief under Section 87A work in the New Tax Regime?

Marginal relief ensures that for taxable income marginally exceeding ₹12,00,000, the calculated tax does not exceed the exact income earned above ₹12 Lakh. For example, on a taxable income of ₹12,50,000, the tax liability is capped at ₹50,000 instead of the standard slab tax of ₹67,500.

What are the income tax slabs under the New Tax Regime for Tax Year 2026-27?

The New Tax Regime slabs are: Up to ₹4 Lakh: Nil (0%); ₹4 Lakh to ₹8 Lakh: 5%; ₹8 Lakh to ₹12 Lakh: 10%; ₹12 Lakh to ₹16 Lakh: 15%; ₹16 Lakh to ₹20 Lakh: 20%; ₹20 Lakh to ₹24 Lakh: 25%; Above ₹24 Lakh: 30%.

What are the income tax slabs under the Old Tax Regime for Tax Year 2026-27?

For resident individuals below 60 under the Old Regime: Up to ₹2.5 Lakh: Nil; ₹2.5 Lakh to ₹5 Lakh: 5%; ₹5 Lakh to ₹10 Lakh: 20%; Above ₹10 Lakh: 30%. For Senior Citizens (60–79), the basic exemption is ₹3 Lakh, and for Super Senior Citizens (80+), it is ₹5 Lakh.

What tax deductions are allowed under the New Tax Regime?

The New Tax Regime permits the Standard Deduction of ₹75,000 (for salaried/pensioners) and Employer NPS contributions under Section 80CCD(2). Common deductions like Section 80C, 80D, 80TTA, and HRA exemptions are not allowable under the New Regime.

What deductions can I claim under the Old Tax Regime?

Under the Old Tax Regime, eligible taxpayers can claim Section 80C (up to ₹1.5 Lakh for PPF, EPF, ELSS, LIC, Principal on Home Loan), Section 80D (Health Insurance up to ₹25,000 or ₹50,000 for seniors), Section 80CCD(1B) NPS (up to ₹50,000), HRA exemption, and Section 24b (Home Loan Interest up to ₹2 Lakh for self-occupied property).

How is House Rent Allowance (HRA) tax exemption calculated?

Under the Old Regime, HRA exemption is computed as the minimum of: (1) Actual HRA received, (2) Rent paid minus 10% of (Basic Salary + DA), and (3) 50% of Basic Salary for metro cities (40% for non-metro cities).

What is the maximum surcharge rate under the New Tax Regime?

Under the New Tax Regime, the maximum surcharge rate is capped at 25% for taxable income exceeding ₹2 Crore. In the Old Tax Regime, the surcharge can reach up to 37% for income exceeding ₹5 Crore.

What is the Health and Education Cess in Indian income tax?

A Health and Education Cess of 4% is applied to the sum of your income tax liability and any applicable surcharge. This cess is collected to fund national health and education programs and applies under both regimes.

How do I know which tax regime is better for me?

It depends on your deductions. If you have significant investments under Section 80C, high rent (HRA), health insurance, and home loan interest, the Old Tax Regime may yield lower tax. If you have few or no investments, the New Tax Regime, with its lower tax slabs and higher ₹12 Lakh rebate threshold, is usually better.

Income Tax Calculator 2026-27 – Old vs New Tax Regime

Particulars	New Regime	Old Regime
Gross Total Income	₹0	₹0
Standard Deduction	₹0	₹0
HRA Exemption	₹0	₹0
Section 80C Deductions	₹0	₹0
Section 80D (Health Insurance)	₹0	₹0
Section 24(b) Home Loan Int.	₹0	₹0
Other Deductions	₹0	₹0
Net Taxable Income	₹0	₹0
Base Slab Tax	₹0	₹0
Section 87A Tax Rebate	₹0	₹0
Marginal Relief (87A)	₹0	₹0
Surcharge & Relief	₹0	₹0
Health & Education Cess (4%)	₹0	₹0
Total Tax Liability	₹0	₹0
Effective Tax Rate	0.00%	0.00%

Authoritative Tax Knowledge Hub

Indian Income Tax Guide for Tax Year 2026-27

Effective 01 April 2026, the Income Tax Act, 2025 establishes a modernized, simplified direct tax framework for Tax Year 2026-27 (covering income earned between 01 April 2026 and 31 March 2027). Under this framework, the New Tax Regime is the statutory default regime for all individual taxpayers, Hindu Undivided Families (HUFs), Association of Persons (AOPs), and Bodies of Individuals (BOIs). Taxpayers retain the statutory option to opt into the Old Tax Regime during return filing if their eligible exemptions and deductions yield a lower total tax liability.

New Tax Regime Slabs

The New Regime features 7 structured tax slabs: 0% up to ₹4 Lakh, 5% from ₹4L to ₹8L, 10% from ₹8L to ₹12L, 15% from ₹12L to ₹16L, 20% from ₹16L to ₹20L, 25% from ₹20L to ₹24L, and 30% on taxable income exceeding ₹24 Lakh. Salaried taxpayers and pensioners enjoy an enhanced standard deduction of ₹75,000.

Section 87A & Marginal Relief

Resident individuals whose net taxable income does not exceed ₹12,00,000 receive a full tax rebate under Section 87A up to ₹60,000, reducing their net income tax to exactly ₹0. For taxable income marginally above ₹12 Lakh, marginal relief prevents a sudden tax cliff by capping payable tax to the income exceeding ₹12 Lakh.

Old Regime Opt-Out Option

Taxpayers who maintain substantial deductions can opt for the Old Regime. It offers a ₹50,000 standard deduction, Section 80C investments up to ₹1,50,000, Section 80D health insurance up to ₹25,000 (₹50,000 for seniors), Section 24(b) home loan interest up to ₹2,00,000, and Section 10(13A) House Rent Allowance (HRA) exemptions.

Tax Year 2026-27 Slabs & Statutory Deductions Breakdown

The Income Tax Act, 2025 delivers wider tax brackets under the New Regime compared to earlier assessment years. Below is the comprehensive slab schedule and comparison between both regimes:

Taxable Income Slab	New Tax Regime Rate	Old Tax Regime (Below 60)	Old Tax Regime (Senior 60–79)	Old Tax Regime (Super Sr 80+)
₹0 – ₹2,50,000	0% (Nil)	0% (Nil)	0% (Nil)	0% (Nil)
₹2,50,001 – ₹3,00,000	0% (Nil)	5%	0% (Nil)	0% (Nil)
₹3,00,001 – ₹4,00,000	0% (Nil)	5%	5%	0% (Nil)
₹4,00,001 – ₹5,00,000	5%	5%	5%	0% (Nil)
₹5,00,001 – ₹8,00,000	5%	20%	20%	20%
₹8,00,001 – ₹10,00,000	10%	20%	20%	20%
₹10,00,001 – ₹12,00,000	10%	30%	30%	30%
₹12,00,001 – ₹16,00,000	15%	30%	30%	30%
₹16,00,001 – ₹20,00,000	20%	30%	30%	30%
₹20,00,001 – ₹24,00,000	25%	30%	30%	30%
Above ₹24,00,000	30%	30%	30%	30%

• Standard Deduction: ₹75,000 (New Regime) vs ₹50,000 (Old Regime) for salaried employees and pensioners.

• Health & Education Cess: 4% levied on total income tax plus applicable surcharge across both regimes.

• Section 87A Rebate Limit: Up to ₹60,000 (taxable income ≤ ₹12,00,000 in New) vs up to ₹12,500 (taxable income ≤ ₹5,00,000 in Old).

• High-Income Surcharge Cap: Surcharge is capped at 25% under the New Regime, whereas the Old Regime reaches up to 37% above ₹5 Crore.

Worked Example 1: Resident Salaried Earner at ₹15,00,000 Annual Salary

Consider a resident salaried individual below age 60 earning a gross annual CTC of ₹15,00,000. Under the Old Regime, the employee invests ₹1,50,000 in Section 80C (PPF, ELSS, EPF) and pays ₹25,000 for health insurance under Section 80D. Here is the step-by-step computation:

New Tax Regime (Default) Recommended

Gross Salary: ₹15,00,000
Less Standard Deduction u/s 16(ia): - ₹75,000
Net Taxable Income: ₹14,25,000
• ₹0 – ₹4,00,000 @ 0%: ₹0
• ₹4,00,001 – ₹8,00,000 @ 5%: ₹20,000
• ₹8,00,001 – ₹12,00,000 @ 10%: ₹40,000
• ₹12,00,001 – ₹14,25,000 @ 15%: ₹33,750
Base Tax Payable: ₹93,750
Section 87A Rebate (Income > ₹12L): ₹0
Health & Education Cess (4%): ₹3,750
Total Tax Liability: ₹97,500
Effective Tax Rate: 6.50%

Old Tax Regime (Opt-Out) With 80C & 80D

Gross Salary: ₹15,00,000
Less Standard Deduction: - ₹50,000
Less Section 80C Deductions: - ₹1,50,000
Less Section 80D Medical Insurance: - ₹25,000
Net Taxable Income: ₹12,75,000
• ₹0 – ₹2,50,000 @ 0%: ₹0
• ₹2,50,001 – ₹5,00,000 @ 5%: ₹12,500
• ₹5,00,001 – ₹10,00,000 @ 20%: ₹1,00,000
• ₹10,00,001 – ₹12,75,000 @ 30%: ₹82,500
Base Tax Payable: ₹1,95,000
Health & Education Cess (4%): ₹7,800
Total Tax Liability: ₹2,02,800
Effective Tax Rate: 13.52%

Net Tax Savings with New Regime: ₹1,05,300 per year (₹8,775 extra take-home pay every month). Save 51.9% Tax

Worked Example 2: Section 87A Zero-Tax Threshold & Marginal Relief Mechanics

Under Tax Year 2026-27 rules, understanding the boundary at ₹12,00,000 taxable income is essential for every salaried professional:

Scenario A: Gross Salary ₹12,75,000 (Zero-Tax Ceiling)

1. Gross salary is ₹12,75,000. Applying the ₹75,000 standard deduction yields a net taxable income of exactly ₹12,00,000.
2. Slab tax computation: ₹0 on first ₹4L + ₹20,000 (5% on ₹4L–₹8L) + ₹40,000 (10% on ₹8L–₹12L) = ₹60,000 Base Tax.
3. Section 87A Rebate: Because taxable income does not exceed ₹12,00,000, the individual receives a full rebate of ₹60,000.
4. Final Tax Outgo = ₹0.

Zero Net Tax Liability

Scenario B: Gross Salary ₹12,85,000 (Marginal Relief)

1. After ₹75,000 standard deduction, taxable income is ₹12,10,000 (₹10,000 above the ₹12L threshold).
2. Normal slab tax would be ₹60,000 + 15% of ₹10,000 = ₹61,500.
3. Without marginal relief, earning ₹10,000 extra would cost ₹61,500 in tax (a ₹51,500 net loss).
4. Marginal Relief Applied: Section 87A caps base tax to the exact excess income (₹10,000). Total tax = ₹10,000 + 4% Cess = ₹10,400.

Relief Saved: ₹51,500

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Tax Disclaimer: This calculator provides an accurate computational estimate based on Tax Year 2026-27 rules codified under the Income Tax Act, 2025. Tax liability can vary depending on specific income streams, classification of capital gains, special-rate provisions, clubbing of income, and applicable surcharge caps. Figures generated are for informational and financial planning purposes only and do not constitute formal tax or legal advice. Verify your final tax liability with official Income Tax Department e-filing utilities or a qualified chartered accountant. EasyToolio is an independent utility and is not affiliated with the Government of India or the Income Tax Department.

Results are estimates for informational purposes only and do not constitute financial, investment, tax, or legal advice.