Introduction
Understanding the income tax slabs for FY 2026-27 is important for effective financial planning. Whether you are salaried, self-employed, or running a small business, knowing the latest tax slab for FY 2026-27 helps you calculate liability accurately and choose between the old tax regime and new tax regime wisely.
In this guide, we break down income tax rates, deductions, rebates, and smart tax-saving strategies in a simple, beginner-friendly way.
Income Tax Basics
Before we look at the income tax slabs, here are some basics:
- Financial Year (FY): 1 April 2026 – 31 March 2027
- Assessment Year (AY): 2027-28
- Tax is calculated on your total taxable income.
- India currently offers two tax systems:
- Old Tax Regime (with deductions & exemptions)
- New Tax Regime (lower rates, fewer deductions)
- Old Tax Regime (with deductions & exemptions)
You can choose between them every year (for salaried individuals).
Income Tax Slabs for FY 2026-27 (AY 2027-28)
Below are the applicable income tax slabs under both regimes for individuals below 60 years.
New Tax Regime Slabs (Default Regime)
| Annual Income | Tax Rate |
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
✔ Standard deduction of ₹50,000 available for salaried individuals.
✔ Rebate under Section 87A available for income up to ₹7 lakh (conditions apply).
Old Tax Regime Slabs
| Annual Income | 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% |
✔ Multiple deductions available under:
- Section 80C
- 80D
- HRA
- Home loan interest (Section 24)
- NPS (80CCD)
Comparison: Old vs New Tax Regime
Choosing between regimes depends on your income and deductions. Here’s a simple income tax slab comparison old vs new:
| Feature | Old Tax Regime | New Tax Regime |
| Tax Rates | Higher | Lower |
| Deductions | Available (80C, 80D, HRA, etc.) | Limited |
| Standard Deduction | Available | Available |
| Best For | People with high deductions | People with fewer deductions |
| Complexity | Slightly complex | Simple & straightforward |
If your total deductions exceed ₹2–3 lakh, the old tax regime may benefit you.
If you do not claim many exemptions, the new tax regime may reduce paperwork and simplify filing.
Tax Rebates & Exemptions
Understanding rebates helps reduce final tax payable.
✅ Section 87A Rebate
- Under the new regime: Available if taxable income ≤ ₹7 lakh.
- Under the old regime: Available if taxable income ≤ ₹5 lakh.
- Maximum rebate: ₹25,000 (subject to eligibility).
✅ Popular Deductions (Old Regime)
| Section | Benefit |
| 80C | Up to ₹1.5 lakh (PPF, ELSS, LIC, EPF, etc.) |
| 80D | Health insurance premium |
| 24(b) | Home loan interest |
| 80CCD(1B) | Additional ₹50,000 for NPS |
How to Calculate Income Tax for FY 2026-27 (Step by Step)
Let’s understand using a simple example.
Step 1: Calculate Gross Income
Add:
- Salary
- Business income
- Rental income
- Capital gains
- Other income
Step 2: Deduct Eligible Deductions
(Only if opting for old regime)
Step 3: Arrive at Taxable Income
Step 4: Apply Income Tax Slabs
Apply relevant tax slab for FY 2026-27.
Step 5: Add Health & Education Cess
4% of total tax.
Example
Assume annual income = ₹10 lakh
Under New Tax Regime:
- ₹0 – 3L = Nil
- 3L – 7L = 5% (₹20,000)
- 7L – 10L = 10% (₹30,000)
Total tax = ₹50,000
Cess (4%) = ₹2,000
Final tax = ₹52,000
(Actual calculation may vary based on deductions and rebate eligibility.)
Tax Planning Tips (Smart Ways to Reduce Tax)
Even with fixed income tax slabs, you can legally reduce tax:
1. Maximise Section 80C
Invest in:
- PPF
- ELSS
- EPF
- Tax-saving FD
2. Buy Health Insurance
Claim deduction under Section 80D.
3. Use NPS for Extra Benefit
Additional ₹50,000 deduction under 80CCD(1B).
4. Plan Home Loan Smartly
Interest deduction available under Section 24.
5. Choose the Right Regime
Do a proper income tax slab comparison old vs new before filing.
Why Tax Planning Matters for Financial Stability
Unexpected tax payments can strain your monthly budget. Planning early prevents last-minute financial stress.
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Conclusion
Understanding the income tax slabs for FY 2026-27 helps you plan better, invest smarter, and avoid penalties. The choice between the old tax regime and new tax regime depends on your deductions, lifestyle, and financial goals.
Before filing your return, compare both options carefully. Smart tax planning today means better financial stability tomorrow.
FAQs
1. What is the tax slab for FY 2026-27?
The tax slab for FY 2026-27 depends on whether you choose the old or new tax regime. The new regime starts at 0% up to ₹3 lakh.
2. Which is better: old tax regime or new tax regime?
If you claim high deductions (80C, 80D, HRA), the old tax regime may benefit you. Otherwise, the new tax regime offers lower rates and simplicity.
3. Is rebate available under the new tax regime?
Yes. Section 87A rebate is available if taxable income is up to ₹7 lakh (subject to conditions).
4. Can I switch between tax regimes every year?
Salaried individuals can choose between regimes every financial year at the time of filing returns.
5. How can I reduce my income tax legally?
You can reduce tax by investing under Section 80C, buying health insurance, contributing to NPS, or choosing the correct regime.
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