India Tax Brackets FY 2026-27 | Tax Atlas
Verified against Income Tax Department — Tax Rates (incometaxindia.gov.in). Reviewed by CA Archa Ak, CA (ICAI).
India · FY 2026-27 · Quick answer
In India for FY 2026-27 (Assessment Year 2027-28), the New Regime has seven income tax slabs. The first ₹4,00,000 of taxable income is tax-free. Rates rise from 5% (₹4–8L) through 10%, 15%, 20%, 25%, to 30% above ₹24,00,000. Salaried employees receive a ₹75,000 standard deduction. Section 87A provides a full rebate for taxable income up to ₹12,00,000 — making gross salary up to ₹12,75,000 effectively tax-free.
FY 2026-27 India income tax brackets
| Rate | Taxable income (new regime) |
|---|---|
| 0% | Up to ₹4,00,000 |
| 5% | ₹4,00,000 – ₹8,00,000 |
| 10% | ₹8,00,000 – ₹12,00,000 |
| 15% | ₹12,00,000 – ₹16,00,000 |
| 20% | ₹16,00,000 – ₹20,00,000 |
| 25% | ₹20,00,000 – ₹24,00,000 |
| 30% | Over ₹24,00,000 |
Applies to taxable income after the ₹75,000 standard deduction (salaried employees). Surcharge for income above ₹50 lakh not included. Source: Income Tax Department, incometaxindia.gov.in.
How India tax brackets work in FY 2026-27
India's New Regime uses a progressive slab system — only the income within each slab is taxed at that slab's rate. For salaried employees, a ₹75,000 standard deduction is subtracted from gross salary first, giving taxable income. Most deductions available under the Old Regime (Sections 80C, 80D, HRA, LTA) are not available in the New Regime, which trades deductions for lower slab rates.
The most important structural feature is Section 87A. If taxable income does not exceed ₹12,00,000, the entire tax liability is rebated — leaving zero tax before the 4% cess. For salaried employees with the ₹75,000 standard deduction, gross salary up to ₹12,75,000 is effectively tax-free. Section 87A also includes marginal relief: when taxable income slightly exceeds ₹12,00,000, tax is capped at the excess above ₹12,00,000. This prevents a sudden spike — at gross ₹12,75,001 the tax due is approximately ₹1 + cess, not ₹60,000.
A 4% Health & Education Cess is charged on net income tax after the Section 87A rebate. The cess applies universally and funds public health and education programmes. Surcharge applies for incomes above ₹50,00,000 (10% surcharge at ₹50L–₹1Cr, rising to 25% above ₹5Cr) — surcharge is not included in this calculator.
The New Regime has been the default under Section 115BAC since FY 2023-24. Salaried employees can switch to the Old Regime each financial year when filing their ITR. The choice must be made before filing the return and cannot be changed after the due date (for salaried employees without business income).
What changed from the previous year
The New Regime slabs for FY 2026-27 are unchanged from FY 2025-26. The major restructuring occurred in Budget 2025 (effective FY 2025-26): the first zero-rate slab rose from ₹3L to ₹4L, the standard deduction for salaried employees increased from ₹50,000 to ₹75,000, and Section 87A was enhanced from ₹25,000 rebate (income ceiling ₹7L) to ₹60,000 (income ceiling ₹12L). These changes continue unchanged for FY 2026-27.
Cumulative tax at common income levels
Computed from the Tax Atlas engine using the default filing status.
| Gross income | Total tax | Take-home | Eff. rate | Marginal |
|---|---|---|---|---|
| ₹4,00,000 | ₹0 | ₹4,00,000 | 0.0% | 0% |
| ₹6,00,000 | ₹0 | ₹6,00,000 | 0.0% | 0% |
| ₹8,00,000 | ₹0 | ₹8,00,000 | 0.0% | 0% |
| ₹10,00,000 | ₹0 | ₹10,00,000 | 0.0% | 0% |
| ₹12,00,000 | ₹0 | ₹12,00,000 | 0.0% | 0% |
| ₹14,00,000 | ₹81,900 | ₹13,18,100 | 5.9% | 16% |
| ₹16,00,000 | ₹1,13,100 | ₹14,86,900 | 7.1% | 16% |
| ₹20,00,000 | ₹1,92,400 | ₹18,07,600 | 9.6% | 21% |
| ₹24,00,000 | ₹2,92,500 | ₹21,07,500 | 12.2% | 26% |
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Frequently asked questions
- What are the New Regime income tax slabs for FY 2026-27?
- 0% on taxable income up to ₹4,00,000; 5% on ₹4,00,001–₹8,00,000; 10% on ₹8,00,001–₹12,00,000; 15% on ₹12,00,001–₹16,00,000; 20% on ₹16,00,001–₹20,00,000; 25% on ₹20,00,001–₹24,00,000; 30% above ₹24,00,000. A ₹75,000 standard deduction applies for salaried employees before slabs are applied.
- What is Section 87A and how does it create a zero-tax limit?
- Section 87A provides a tax rebate equal to actual income tax payable (up to ₹60,000) if taxable income does not exceed ₹12,00,000. Since tax on exactly ₹12,00,000 taxable income is ₹60,000, the rebate eliminates all income tax at that level. For salaried employees: gross salary – ₹75,000 standard deduction = taxable income. So gross salary ≤ ₹12,75,000 gives taxable income ≤ ₹12,00,000 → zero tax (before 4% cess).
- Is there a sudden tax jump above ₹12,75,000 gross?
- No. Section 87A includes marginal relief that prevents a sudden cliff. When taxable income slightly exceeds ₹12,00,000, income tax is capped at the excess over ₹12,00,000 (plus 4% cess). Tax rises smoothly from ₹0 as income grows above ₹12,75,000, converging with normal slab rates at around taxable ₹12,70,588 (gross ≈ ₹13,45,588). Only beyond this point do full slab rates apply.
- New Regime vs Old Regime — which bracket system is better?
- The New Regime's lower slabs (0%, 5%, 10%...) are simpler, and the ₹12,75,000 zero-tax ceiling favors lower to middle earners. The Old Regime (5%, 20%, 30%) has higher rates but allows substantial deductions (80C ₹1.5L, 80D, HRA, LTA). For taxpayers with total deductions above approximately ₹3.75L (depending on income), the Old Regime may save more. Calculate both before filing.
- Does the 4% Health & Education Cess create a separate bracket?
- No. The cess is a flat 4% charge on the income tax amount after any rebate — it is not a bracket tax. It applies uniformly regardless of income level. It was introduced to fund public health and education schemes and cannot be reduced by deductions, rebates, or the standard deduction.