Official Income Tax Slabs for AY 2026-27 (FY 2025-26) — New vs. Old Regime
Under Section 115BAC of the Income-tax Act, 1961 (as amended for Financial Year 2025-26 / Assessment Year 2026-27), the New Tax Regime is the default regime for individuals, HUFs, and AOPs. Salaried employees and pensioners receive an enhanced ₹75,000 Standard Deduction u/s 16(ia) in the New Regime (compared to ₹50,000 in the Old Regime), while resident individuals enjoy a full tax rebate u/s 87A up to ₹12,00,000 of net taxable income.
| New Regime Slabs (AY 2026-27) | New Tax Rate | Old Regime Slabs (<60 Yrs) | Old Tax Rate |
|---|---|---|---|
| Up to ₹4,00,000 | Nil (0%) | Up to ₹2,50,000 | Nil (0%) |
| ₹4,00,001 to ₹8,00,000 | 5% | ₹2,50,001 to ₹5,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% | ₹5,00,001 to ₹10,00,000 | 20% |
| ₹12,00,001 to ₹16,00,000 | 15% | Above ₹10,00,000 | 30% |
| ₹16,00,001 to ₹20,00,000 | 20% | Old Regime Rebate u/s 87A: Up to ₹12,500 if Taxable Income ≤ ₹5,00,000. Allows Sec 80C, 80D, HRA & Sec 24(b). | |
| ₹20,00,001 to ₹24,00,000 | 25% | ||
| Above ₹24,00,000 | 30% | ||
How Section 87A ₹12 Lakh Rebate & Marginal Relief Work Together
At ₹12,00,000 taxable income under the AY 2026-27 New Regime, slab tax equals ₹20,000 (5% on ₹4L–₹8L) + ₹40,000 (10% on ₹8L–₹12L) = ₹60,000, which is completely offset by the ₹60,000 Rebate u/s 87A (resulting in ₹0 tax). Note that special-rate capital gains (such as LTCG u/s 112A at 12.5% or STCG u/s 111A at 20%) are taxed separately and are not eligible for the Section 87A rebate.
What happens if your taxable income is ₹12,20,000? Without relief, your slab tax would jump to ₹63,000! Under the statutory Marginal Relief proviso to Section 87A, your income tax before cess cannot exceed the income earned above ₹12,00,000 (which is ₹20,000). Therefore, you receive ₹43,000 in Marginal Relief and pay only ₹20,000 + ₹800 (4% cess) = ₹20,800. Once you file your return on the portal, upload your downloaded JSON on our ITR JSON to Computation PDF Converter to generate your 2-page CA-style computation sheet!
Section 80D Health Insurance & Section 80C Term Life Insurance Deductions (Old vs. New Regime)
Before choosing between the Old and New Tax Regimes, evaluate your household's essential risk protection—Family Floater Health Insurance, Senior Citizen Parent Medical Cover, and Pure Term Life Insurance:
| Tax-Saving Protection Instrument | Income Tax Section | Max Annual Deduction (Old Regime) | Financial Planning Role |
|---|---|---|---|
| Family Health Insurance (Self, Spouse & Children) | Section 80D | Up to ₹25,000 (₹50,000 if Senior Citizen) | Protects savings against hospitalisation inflation (12%–14% p.a.) |
| Parents' Health Insurance Policy | Section 80D (Additional) | Additional ₹25,000 (<60 yrs) or ₹50,000 (60+ Senior Parents) | Combined Sec 80D benefit can reach ₹75,000 to ₹1,00,000/year |
| Pure Term Life Insurance Plan | Section 80C & Sec 10(10D) | Up to ₹1,50,000 premium; death benefit 100% tax-free u/s 10(10D) | Essential income replacement shield for anyone with a Home or Business Loan |
| Employer Corporate NPS Contribution | Section 80CCD(2) | Up to 14% of Basic + DA in New Regime (10% in Old Regime for Pvt. sector) | One of the most powerful deductions allowed even inside the New Tax Regime! |
GST Inclusive vs. Exclusive Formulas & Indian GST Rate Structure
Registered MSME traders, e-commerce sellers, and service providers under the Goods and Services Tax (GST) regime issue tax invoices under two common pricing models:
- GST Exclusive Pricing (B2B Wholesale & Services):
GST Amount = Base Price × (GST Rate ÷ 100)andInvoice Total = Base Price + GST Amount. - GST Inclusive Pricing (Retail MRP Billing):
Taxable Value = MRP ÷ (1 + GST Rate ÷ 100)andEmbedded GST = MRP − Taxable Value. For example, an electronics item sold at ₹59,000 inclusive of 18% GST has a net taxable value of ₹50,000 and embedded GST of ₹9,000 (₹4,500 CGST + ₹4,500 SGST).
Frequently Asked Questions (Tax, GST, 44AD & HRA)
Up to what income is tax zero under the New Tax Regime for AY 2026-27 (FY 2025-26)?
Under the revised Section 115BAC slabs for Assessment Year 2026-27 (Financial Year 2025-26), resident individuals get a Section 87A tax rebate of up to Rs. 60,000 when net taxable income does not exceed Rs. 12,00,000. For salaried employees claiming the Rs. 75,000 Standard Deduction u/s 16(ia), gross salary up to Rs. 12,75,000 attracts zero income tax.
How does Marginal Relief u/s 87A work when taxable income slightly exceeds Rs. 12 Lakh?
If a resident individual's taxable income under the New Tax Regime slightly exceeds Rs. 12,00,000 (for instance, Rs. 12,15,000), normal slab tax would jump to Rs. 62,250. Marginal Relief u/s 87A caps the tax before cess at the excess income over Rs. 12,00,000 (i.e., Rs. 15,000 + 4% cess = Rs. 15,600), ensuring you never lose money by earning slightly above Rs. 12 Lakh.
When is the Old Tax Regime still better than the New Tax Regime?
For AY 2026-27, the Old Tax Regime generally becomes advantageous only if your combined eligible deductions and exemptions—such as HRA u/s 10(13A), Home Loan Interest u/s 24(b) up to Rs. 2 Lakh, Sec 80C (Rs. 1.5 Lakh), Sec 80D Medical Insurance, and NPS u/s 80CCD(1B)—exceed Rs. 4.50 Lakh to Rs. 5.25 Lakh depending on your income bracket.
How do I remove GST from an inclusive MRP or invoice total?
Select 'GST Inclusive (Remove GST)' in our GST tab above. Mathematically, Taxable Value = Gross Inclusive Amount ÷ (1 + GST% / 100), and GST Amount = Gross Inclusive Amount − Taxable Value. For an intra-state sale at 18% GST, the GST portion splits equally into 9% CGST and 9% SGST.
What are the minimum profit rates under Section 44AD and Section 44ADA?
Under Section 44AD for eligible resident small businesses, minimum presumptive net profit is 6% on turnover received via digital/banking modes (UPI, NEFT, RTGS, cards, account-payee cheque) and 8% on cash receipts. Under Section 44ADA for specified professionals (doctors, CAs, engineers, IT/design consultants), minimum presumptive profit is 50% of gross receipts.
How is HRA Exemption calculated under Section 10(13A)?
Under Section 10(13A) read with Rule 2A (available under the Old Tax Regime), exempt HRA is the lowest of three figures: (1) Actual HRA received from employer, (2) Actual rent paid minus 10% of (Basic Salary + DA), or (3) 50% of (Basic + DA) for Delhi, Mumbai, Kolkata & Chennai (40% for all non-metro cities like Indore, Bhopal, Pune, Bengaluru, Jaipur, and Hyderabad).