India Tax Brackets FY 2026-27
For FY 2026-27, India's New Regime has seven income tax slabs from 0% to 30%. Section 87A provides a full rebate on tax up to ₹12,00,000 taxable income — making gross salary up to ₹12,75,000 effectively tax-free.
Verified against Income Tax Department — Tax Rates (incometaxindia.gov.in). Reviewed by CA Archa Ak, CA (ICAI).
India · FY 2026-27 · Summary
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
| Taxable income (new regime) | Rate | Cumulative tax |
|---|---|---|
| Up to ₹4,00,000 | 0% | ₹0 |
| ₹4,00,000 – ₹8,00,000 | 5% | ₹20,000 |
| ₹8,00,000 – ₹12,00,000 | 10% | ₹60,000 |
| ₹12,00,000 – ₹16,00,000 | 15% | ₹1,20,000 |
| ₹16,00,000 – ₹20,00,000 | 20% | ₹2,00,000 |
| ₹20,00,000 – ₹24,00,000 | 25% | ₹3,00,000 |
| Over ₹24,00,000 | 30% | — |
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.
Are India tax brackets changing in FY 2026-27?
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.
| Threshold / parameter | Previous year | FY 2026-27 | Change |
|---|---|---|---|
| Zero-rate slab ceiling | ₹3,00,000 (FY 2024-25) | ₹4,00,000 | Changed in FY 2025-26 |
| Standard deduction (salaried) | ₹50,000 (FY 2024-25) | ₹75,000 | Changed in FY 2025-26 |
| Section 87A rebate ceiling | ₹7,00,000 (FY 2024-25) | ₹12,00,000 | Changed in FY 2025-26 |
| Section 87A max rebate | ₹25,000 (FY 2024-25) | ₹60,000 | Changed in FY 2025-26 |
| FY 2026-27 vs FY 2025-26 | All slabs same | All slabs same | No change this year |
India tax at common income levels (FY 2026-27)
Computed by the Tax Atlas engine from official FY 2026-27 rates. Default filing status; no additional deductions or credits.
| Gross income | Taxable income | Total tax | Take-home | Eff. rate |
|---|---|---|---|---|
| ₹8,00,000 | ₹7,25,000 | ₹0 | ₹8,00,000 | 0.0% |
| ₹12,75,000 | ₹12,00,000 | ₹0 | ₹12,75,000 | 0.0% |
| ₹20,00,000 | ₹19,25,000 | ₹1,92,400 | ₹18,07,600 | 9.6% |
| ₹30,00,000 | ₹29,25,000 | ₹4,75,800 | ₹25,24,200 | 15.9% |
| ₹50,00,000 | ₹49,25,000 | ₹10,99,800 | ₹39,00,200 | 22.0% |
Step-by-step: ₹20,00,000 gross
Use the income tax calculator for a personalised calculation with your exact income, filing status, and deductions.
How India tax brackets work
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).
India tax: key rules and exceptions
The New Regime is the default under Section 115BAC since FY 2023-24. Salaried employees without business income can still opt for the Old Regime each year when filing their ITR — the choice must be made before the due date. The Old Regime retains deductions like 80C (₹1.5L), 80D (medical insurance), HRA, and LTA at higher slab rates (5%, 20%, 30%). If your total eligible deductions exceed approximately ₹3.75 lakh, the Old Regime may result in lower tax.
Surcharge applies to income above ₹50 lakh and is not included in this calculator. Rates: 10% surcharge on income ₹50L–₹1Cr, 15% on ₹1Cr–₹2Cr, 25% on ₹2Cr–₹5Cr, and 25% above ₹5Cr (marginal relief capped at 25% under the New Regime). A 4% Health & Education Cess then applies on (tax + surcharge). For high earners, the effective rate can exceed 39%.
The Assessment Year (AY) distinction is important for compliance. Income earned in FY 2026-27 (April 2026 to March 2027) is assessed in AY 2027-28. The ITR filing deadline for salaried employees without audit is typically 31 July 2027. Form 26AS and AIS (Annual Information Statement) can be used to verify TDS credits before filing.
How do tax brackets work? (Common misconception)
A common misconception is that earning more can leave you worse off — that crossing into a higher bracket means more of your income gets taxed at a higher rate. This is not how progressive taxation works.
Each bracket applies only to the income that falls within its range. If your income crosses into a higher bracket, only the amount above the threshold is taxed at the higher rate — not your entire income. A higher salary always means higher take-home pay.
Your marginal rate is the rate on your last dollar earned. Your effective rate is total tax divided by gross income — always lower than your marginal rate. See the marginal tax rate and effective tax rate glossary entries.
Calculate your exact India tax
Enter your income for a full breakdown including all deductions, credits, and social contributions.
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.