Income Tax Slab Rates for FY 2026–27 (AY 2027–28) – Latest Updated

In India, income tax is charged based on an individual’s income level, known as income tax slabs. Higher income attracts a higher tax rate. These slabs are revised periodically through the Union Budget to reflect changes in income levels, inflation, and government policy.

The finance minister kept the income tax slabs unchanged for FY 2026–27 compared with the previous year under the new tax regime. That means the same slab structure you’ve documented continues — with no reduction or increase in marginal rates this year.

This guide explains the latest slabs, tax calculation, old vs new regime comparison, and past year changes.

Income Tax Slab for FY 2026–27 (Latest, New Regime)

The new income tax slabs for FY 2026–27 aim to reduce the tax burden on middle-income earners while keeping the structure simple and deduction-free.

Key Highlights:

• Income up to ₹4 lakh is tax-free
• Fewer slabs and lower marginal rates
• New tax regime remains the default regime

Zero Tax on ₹12.75 Lakh Income under the New Tax Regime

Under the new tax regime for FY 2025–26 (AY 2026–27), a salaried individual earning up to ₹12.75 lakh can legally pay zero income tax.

Here’s how this works:

• Salaried taxpayers get a standard deduction of ₹75,000, which brings a gross income of ₹12.75 lakh down to a taxable income of ₹12 lakh.
• Under the revised slabs, income up to ₹12 lakh attracts no tax, thanks to the Section 87A rebate.
• As a result, the entire tax liability is wiped out, leading to zero tax payable.

This benefit is available only under the new tax regime.

Salaried vs Non-Salaried Taxpayers

• Salaried individuals can reach zero tax at ₹12.75 lakh because of the standard deduction.
• Non-salaried individuals generally get tax-free income only up to ₹12 lakh, although marginal relief applies if income exceeds this limit slightly.

What if Income Exceeds ₹12.75 Lakh?

If income goes marginally above ₹12.75 lakh, marginal relief ensures that:

• The additional tax payable is not higher than the extra income earned.

Also important to note:

• The Section 87A rebate does not apply to special income such as Capital Gains.
• For higher earners, the 30% tax slab now starts at ₹24 lakh, offering relief to middle- and upper-middle-income taxpayers compared to earlier regimes.

Income Tax Calculation Example for FY 2026–27

Let’s understand how income tax is calculated under the new tax regime.

Example - Annual taxable income: ₹10,00,000

Total Income Tax: ₹40,000 Health & Education Cess (4%): ₹1,600 Total Tax Payable = ₹41,600

Income Tax Slab for FY 2025–26

No structural changes were introduced in FY 2025–26 compared to FY 2026–27.

Income Tax Slab Changes in Union Budget 2024 (FY 2024–25)

Under Union Budget 2024, the government simplified the new tax regime further and positioned it as the default option.

Important Notes:

• Income up to ₹7 lakh became tax-free due to Section 87A rebate
• New tax regime became the default regime

Income Tax Slab for FY 2023–24

In Budget 2023, the government significantly enhanced the new tax regime to encourage wider adoption.

Key Changes Introduced:

• Section 87A rebate increased to ₹7 lakh
• Standard deduction allowed for salaried taxpayers
• New regime became the default choice

Old Tax Regime Slabs (For Comparison Only)

The old tax regime allows deductions such as Section 80C, HRA, LTA, and Home Loan interest, but follows higher slab rates.

Previous Years’ Income Tax Slabs (Historical Reference)

This section is provided for archival and comparison purposes.

Income Tax Slab FY 2019–20 (AY 2020–21)

Individuals Below 60 Years

• Health and Education Cess: 4%
• (Older slabs for senior citizens and companies are retained for historical context.)
• Surcharge applies for high-income taxpayers
• Tax laws are subject to change with every Union Budget

Conclusion

The income tax slabs for FY 2026–27 (AY 2027–28) continue the government’s push towards a simpler and more transparent tax structure under the new tax regime. With income up to ₹4 lakh exempt from tax and lower slab rates across income levels, most salaried and middle-income taxpayers are likely to benefit from higher take-home pay and easier compliance.

As income tax rules evolve with every Union Budget, staying updated with the latest slabs and understanding how they impact your tax liability is essential for effective financial planning. Reviewing your tax position each year can help you minimise tax outgo while aligning your investments with long-term Financial goals.