Indian Income Tax Slabs: New Regime, Old Regime, and Surcharge

For Assessment Year 2026-27, the income tax slabs in India come in two versions. The new regime is the default and taxes individual income across seven brackets, from nil up to ₹4,00,000 through to 30 percent above ₹24,00,000. The old regime keeps its three-bracket structure with rates of 5, 20, and 30 percent, plus age-based exemption thresholds and full access to deductions. Salaried individuals under the new regime pay zero tax on income up to ₹12,75,000 once the standard deduction and Section 87A rebate are applied.1Press Information Bureau. No Income Tax on Annual Income Upto Rs 12 Lakh

New Regime Slabs for AY 2026-27

The Finance Act 2025 revised Section 115BAC to widen every bracket and raise the basic exemption from ₹3,00,000 to ₹4,00,000. The regime now has seven tiers instead of six, with a new 25 percent bracket inserted between the 20 percent and 30 percent rates. Because the new regime is the default, you are assessed under these rates automatically unless you actively opt for the old one.2Income Tax Department. FAQs on New vs Old Tax Regime

  • Up to ₹4,00,000: Nil
  • ₹4,00,001 to ₹8,00,000: 5 percent
  • ₹8,00,001 to ₹12,00,000: 10 percent
  • ₹12,00,001 to ₹16,00,000: 15 percent
  • ₹16,00,001 to ₹20,00,000: 20 percent
  • ₹20,00,001 to ₹24,00,000: 25 percent
  • Above ₹24,00,000: 30 percent

These rates apply identically to every individual regardless of age. There is no separate exemption threshold for senior or super senior citizens under the new regime.3Income Tax Department. Salaried Individuals for AY 2026-27

Salaried employees and pensioners also get a standard deduction of ₹75,000, which reduces taxable salary income before the slab rates apply.1Press Information Bureau. No Income Tax on Annual Income Upto Rs 12 Lakh That deduction is what pushes the effective zero-tax ceiling for salaried individuals from ₹12,00,000 to ₹12,75,000.

Old Regime Slabs for AY 2026-27

The old regime keeps its longstanding three-bracket structure and offers age-based exemption thresholds. Rates are higher, but taxpayers who invest heavily in instruments like PPF, ELSS, life insurance, or health insurance premiums can sometimes produce a lower bill here despite the steeper rates.

Individuals Below 60

  • Up to ₹2,50,000: Nil
  • ₹2,50,001 to ₹5,00,000: 5 percent
  • ₹5,00,001 to ₹10,00,000: 20 percent
  • Above ₹10,00,000: 30 percent
3Income Tax Department. Salaried Individuals for AY 2026-27

Senior Citizens Aged 60 to 79

Resident individuals aged 60 or above but below 80 at any point during the financial year get a higher basic exemption of ₹3,00,000. Income from ₹3,00,001 to ₹5,00,000 is taxed at 5 percent. The 20 and 30 percent brackets remain the same as for younger taxpayers.4Income Tax Department. Senior Citizens and Super Senior Citizens for AY 2026-27

Super Senior Citizens Aged 80 and Above

Residents aged 80 or older during the financial year skip the 5 percent bracket entirely. Their first ₹5,00,000 is exempt, income from ₹5,00,001 to ₹10,00,000 is taxed at 20 percent, and anything above ₹10,00,000 is taxed at 30 percent.4Income Tax Department. Senior Citizens and Super Senior Citizens for AY 2026-27

The age-based thresholds only apply under the old regime. A 75-year-old who stays on the new regime is assessed against the standard ₹4,00,000 nil slab and gets no senior citizen benefit.

Section 87A Rebate

Section 87A lets resident individuals wipe out their tax liability entirely if their taxable income stays below a specified ceiling. The rebate is subtracted from the tax already calculated through the slab system, not from income.

Under the new regime, the rebate covers up to ₹60,000 of tax on ordinary income (excluding special-rate income like capital gains) for anyone whose taxable income does not exceed ₹12,00,000. The slab-rate tax on exactly ₹12,00,000 of ordinary income works out to ₹60,000, so the rebate cancels the full amount. For salaried taxpayers, the ₹75,000 standard deduction means gross salary income of up to ₹12,75,000 produces zero tax.1Press Information Bureau. No Income Tax on Annual Income Upto Rs 12 Lakh

A marginal relief rule prevents a cliff effect just above ₹12,00,000. If your taxable income lands between ₹12,00,001 and roughly ₹12,75,000, the tax you owe cannot exceed the amount by which your income exceeds ₹12,00,000. Someone earning ₹12,10,000 therefore pays at most ₹10,000 rather than the full slab-rate amount of around ₹61,500.

Under the old regime, the Section 87A rebate is capped at ₹12,500 for taxable income up to ₹5,00,000. Since the slab-rate tax on ₹5,00,000 for someone below 60 is exactly ₹12,500, this effectively makes income up to ₹5,00,000 tax-free under the old regime as well.

Surcharge and Cess

After computing slab-rate tax and applying any rebate, high earners face a surcharge layered on top of the tax itself. The thresholds are the same under both regimes, but the top rate differs.

  • Income up to ₹50,00,000: No surcharge
  • ₹50,00,001 to ₹1,00,00,000: 10 percent of income tax
  • ₹1,00,00,001 to ₹2,00,00,000: 15 percent of income tax
  • ₹2,00,00,001 to ₹5,00,00,000: 25 percent of income tax under both regimes
  • Above ₹5,00,00,000: 25 percent under the new regime, 37 percent under the old regime
3Income Tax Department. Salaried Individuals for AY 2026-27

Marginal relief applies at every surcharge boundary under both regimes. Your total tax plus surcharge cannot exceed the tax you would have paid at the threshold plus the excess income above that threshold, so crossing a boundary by a small amount does not trigger a disproportionate jump in liability.3Income Tax Department. Salaried Individuals for AY 2026-27

A flat 4 percent Health and Education Cess is calculated on the combined amount of income tax plus any applicable surcharge. Every taxpayer pays this regardless of income level or chosen regime.

Choosing Between the Two Regimes

The new regime trades lower slab rates for the loss of nearly all deductions and exemptions. Whether the trade works in your favor depends on how much you can claim under the old regime.

What You Lose Under the New Regime

The biggest forfeiture is the entire Chapter VI-A family of deductions. That includes Section 80C (up to ₹1,50,000 for PPF, ELSS, life insurance premiums, tuition fees, and similar instruments), Section 80D (health insurance premiums), Section 80E (education loan interest), Section 80G (charitable donations), and Section 80TTA/80TTB (savings account interest). House Rent Allowance under Section 10(13A) is also unavailable, and you cannot deduct home loan interest on a self-occupied property.5Income Tax Department. FAQs on New Tax vs Old Tax Regime

What You Keep Under the New Regime

A handful of benefits survive. The ₹75,000 standard deduction for salaried employees is available. Employer contributions to the National Pension System under Section 80CCD(2) remain deductible up to 14 percent of salary. Exemptions for gratuity, leave encashment on retirement (up to ₹25,00,000 for non-government employees), and voluntary retirement receipts under Section 10(10C) also apply. Travel and conveyance allowances received specifically for performing work duties are exempt as well.6Sansad. Lok Sabha Question Annexure – Unstarred Question No 1280

When the Old Regime May Save More

The old regime tends to work out better for taxpayers who can claim large combined deductions. If your total eligible deductions and exemptions exceed roughly ₹3,75,000 to ₹4,00,000, running the numbers under both regimes is worth the effort. This is especially common for people paying significant home loan interest, health insurance premiums for elderly parents, and making full use of the ₹1,50,000 Section 80C limit. For someone with few investments and no HRA claim, the new regime’s wider brackets and lower rates almost always win.

Switching Between Regimes

The rules depend on whether you have business or professional income.

Salaried taxpayers and those without business income can switch every year. You make the choice directly in your income tax return (ITR-1 or ITR-2) at the time of filing, with no separate form to submit.2Income Tax Department. FAQs on New vs Old Tax Regime You can recalculate each year and pick whichever regime produces the lower bill.

Taxpayers with business or professional income face stricter rules. To opt out of the new regime, you must file Form 10-IEA online before your return filing deadline. Once you leave the old regime, you get only one chance to switch back to the new regime by filing Form 10-IEA again with the “Re-enter” option. After that, the choice is locked in permanently as long as you continue to have business income.7Income Tax Department. Form 10-IEA FAQ Missing the deadline renders the form invalid, and you stay on the new regime by default.

If you have business income and are considering the old regime, file Form 10-IEA before filing your return. The form’s acknowledgement number is required in the ITR itself, and the form cannot be revised once submitted.7Income Tax Department. Form 10-IEA FAQ

Filing Deadline and Late Filing Costs

For most individual taxpayers not subject to audit requirements, the return for FY 2025-26 is due by July 31, 2026. Filing after this date triggers a late filing fee under Section 234F of ₹1,000 if your total taxable income is ₹5,00,000 or less, and ₹5,000 if it exceeds ₹5,00,000. The fee applies even if you owe no tax.

Late filers also face interest under Section 234A at 1 percent per month, or part of a month, on any unpaid tax from the due date until the return is actually filed. Late filing also means you lose the ability to carry forward certain losses (like capital losses or business losses) to offset future income, and the Section 87A rebate may not be available on a belated return for some assessment years.