Income Tax in India FY 2026-27 — Old vs New Regime Explained
For FY 2026-27 (Assessment Year 2027-28), India runs two parallel tax systems and you choose one each year. The New Regime is the default: lower rates, a big ₹60,000 rebate, but almost no deductions. The Old Regime keeps the higher legacy rates but lets you subtract 80C, 80D, NPS, home-loan interest, HRA and more. The right answer is entirely personal — it depends on how many deductions you actually claim. This calculator runs both regimes on your exact numbers and tells you which one leaves more money in your pocket, down to the rupee.
New Regime Slabs — FY 2026-27 (AY 2027-28)
| Taxable income slab | Tax rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Standard deduction: ₹75,000 (salaried/pensioners). Section 87A rebate: up to ₹60,000, making taxable income up to ₹12 lakh fully tax-free. Marginal relief applies just above ₹12 lakh so your tax never exceeds the amount you earned over ₹12 lakh (the relief tapers out by about ₹12.7 lakh taxable).
Old Regime Slabs — FY 2026-27 (below 60)
| Taxable income slab | Tax rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Basic exemption rises to ₹3,00,000 for senior citizens (60–80) and ₹5,00,000 for super seniors (80+). Standard deduction: ₹50,000. Section 87A rebate: up to ₹12,500, so taxable income up to ₹5 lakh is tax-free. The Old Regime is worth it only if your deductions are large.
The Break-Even Rule — When Does Old Beat New?
Because the FY 2026-27 New Regime taxes a ₹12.75 lakh salary at zero and uses much gentler slabs, the Old Regime now needs large deductions to win — far more than the ₹3.75–4 lakh figure still quoted by older articles written under the FY 2024-25 slabs. Here is the actual break-even, computed by this calculator for a salaried person below 60:
| Gross salary | Deductions needed for Old Regime to win |
|---|---|
| Up to ₹12.75 lakh | New Regime is tax-free — Old can't realistically beat it |
| ₹15 lakh | about ₹5.45 lakh |
| ₹20 lakh | about ₹7.1 lakh |
| ₹25 lakh and above | about ₹8 lakh |
Hitting ₹5 lakh+ of deductions realistically needs a home loan (₹2 lakh interest) plus a full ₹1.5 lakh 80C plus ₹50,000 NPS plus a sizeable HRA exemption — all at once. For most salaried people without a home loan, the New Regime now wins comfortably. But the answer shifts with both income and deductions, so always run your own figures above.
Surcharge & Cess on High Incomes
On top of the slab tax, a 4% Health and Education cess is added for everyone. High earners also pay a surcharge on the tax amount:
| Total income | New Regime | Old Regime |
|---|---|---|
| Above ₹50 lakh | 10% | 10% |
| Above ₹1 crore | 15% | 15% |
| Above ₹2 crore | 25% | 25% |
| Above ₹5 crore | 25% (capped) | 37% |
The New Regime's 25% surcharge cap is a real advantage for those earning above ₹2 crore — the effective top tax rate is about 39% versus roughly 42.7% in the Old Regime.
What the New Regime Gives Up
Choosing the New Regime means you cannot claim most popular deductions:
- Section 80C — PF, ELSS, PPF, life insurance, principal on home loan (₹1.5 lakh)
- Section 80D — health insurance premiums
- Section 80CCD(1B) — the extra ₹50,000 NPS deduction
- Section 24(b) — home loan interest on a self-occupied house (₹2 lakh)
- HRA & LTA exemptions
What it does keep: the ₹75,000 standard deduction and the employer's NPS contribution under 80CCD(2). If you claim little beyond the standard deduction, the New Regime is almost always cheaper.
Frequently Asked Questions
How much tax do I pay on ₹12 lakh salary in 2026?
Under the New Regime, a ₹12 lakh gross salary becomes ₹11.25 lakh taxable after the standard deduction — within the ₹12 lakh rebate limit, so your tax is zero. Even at ₹12.75 lakh gross, taxable income is exactly ₹12 lakh and tax is still nil.
How much tax on ₹15 lakh income?
New Regime: ₹15 lakh − ₹75,000 standard deduction = ₹14.25 lakh taxable → ₹93,750 tax plus 4% cess = ₹97,500. For the Old Regime to beat this at a ₹15 lakh salary you'd need roughly ₹5.4 lakh of deductions. Use the calculator above to add your deductions and compare instantly.
Can I switch between the Old and New regime every year?
Salaried taxpayers with no business income can switch freely each financial year when filing their return. Those with business or professional income can move to the Old Regime only once and face restrictions switching back.
Is the New Regime compulsory?
No, but it is the default. If you don't actively opt for the Old Regime when filing (or in your employer's declaration), you'll be taxed under the New Regime.
Does the standard deduction apply to the New Regime?
Yes — ₹75,000 for salaried individuals and pensioners. The Old Regime gives ₹50,000. Self-employed and business income earners get no standard deduction under either regime.
What is marginal relief in the New Regime?
Just above the ₹12 lakh rebate limit, marginal relief caps your tax so you never pay more in tax than the income you earned over ₹12 lakh. For example, at ₹12.10 lakh taxable, the normal tax would be ~₹61,500 but marginal relief limits it to about ₹10,000 — the amount above ₹12 lakh.
How is monthly TDS on salary calculated?
Your employer estimates your annual tax under your chosen regime and deducts roughly one-twelfth each month as TDS. The "Monthly TDS (approx)" figure above is simply your annual tax ÷ 12 — actual TDS varies with when you submit investment proofs.