Income Tax Slabs in India

If you are checking Form 16, the Annual Information Statement (AIS), Form 26AS or an Income Tax Return (ITR) utility, use the income tax slabs for the year in which the income arose.

For income earned from 1 April 2025 to 31 March 2026, use Financial Year (FY) 2025-26 and Assessment Year (AY) 2026-27 rates. The new tax regime is the default, but an eligible taxpayer can compare it with the old tax regime before filing an ITR.

Using the correct year prevents income earned in one financial year from being tested against rates for another period.

The immediate decision is not merely which slab contains your salary. You must first calculate taxable income under each regime.

A deduction or exemption can change the taxable amount, while a rebate reduces the tax calculated afterward. Tax Deducted at Source (TDS) is a tax credit.

A refund arises only when available tax credits exceed the final liability.

What are the income tax slabs in India?

The income tax slabs in India apply progressive rates to successive portions of taxable income. They do not apply one rate to the entire amount.

For FY 2025-26, corresponding to AY 2026-27, the new tax regime contains seven slabs from Nil to 30%. The old tax regime retains its existing slabs and age-based basic exemption limits.

These are the FY 2025-26 income tax slabs under the new tax regime:

The Income Tax Department publishes these AY 2026-27 rates in its guidance for salaried individuals. For taxable income of ₹15 lakh, the calculation does not charge 15% on the entire ₹15 lakh.

It charges Nil on the first ₹4 lakh, 5% on the next ₹4 lakh, 10% on the next ₹4 lakh and 15% on the remaining ₹3 lakh.

These are the standard old-regime income tax slabs for an individual below 60 during FY 2025-26:

Under the old tax regime, a resident senior citizen aged 60 or above but below 80 has a Nil tax limit of ₹3 lakh. A resident super senior citizen aged 80 or above has a Nil tax limit of ₹5 lakh.

The remaining old-regime slabs then apply according to the taxpayer’s age category. The new tax regime does not provide these higher age-based basic exemption limits.

The applicable basic exemption limit therefore depends on the chosen regime and, under the old tax regime, the resident individual’s age category and income level.

Health and Education Cess is added at 4% of income tax plus surcharge, if any, for FY 2025-26 and AY 2026-27. Surcharge can also apply when total income exceeds ₹50 lakh.

Amounts above ₹50 lakh, ₹1 crore, ₹2 crore or ₹5 crore therefore require more than a basic slab calculation. You must also check surcharge and marginal relief.

Remember that a slab rate applies only to the portion of taxable income falling inside that slab.

Verify the applicable income tax slabs on the Income Tax Department portal before completing the tax computation in your ITR. The next step is to identify which receipts form part of your total income.

Which income enters the slab calculation?

Income enters the slab calculation after taxable receipts are classified under the applicable heads and adjusted for permitted exemptions, deductions, set-offs and special-rate treatment. Your salary figure alone may not equal your taxable total.

Bank interest, rent, dividends, capital gains or other receipts can also appear in AIS or Form 26AS.

For an individual, receipts are generally grouped under salary, house property, profits and gains from business or profession, capital gains, and other sources. Salary can include basic pay, taxable allowances, bonuses and taxable perquisites.

House property income can include rent from a house after the applicable tax computation. Other-source receipts commonly include savings-account interest, fixed-deposit interest and dividends.

Income under each head should be computed under its own rules before the figures are combined. The final income figure can include additions, losses or set-offs not visible in Form 16.

Some receipts do not follow the ordinary income tax slabs. Certain capital gains, lottery winnings and other specified amounts can be taxed at special rates.

Separate these amounts before concluding that the new tax regime’s ₹12 lakh rebate threshold eliminates the entire tax. The applicable ITR schedules identify special-rate items separately.

A deduction reduces the amount on which tax is computed. An exemption excludes an eligible receipt or portion from taxable income.

A rebate reduces calculated income tax. A tax credit, such as TDS, is set against the final tax liability.

A refund is the excess returned after the Income Tax Department processes the ITR. These terms describe different stages of the calculation.

Under the new tax regime, a salaried taxpayer can claim a standard deduction of up to ₹75,000 for FY 2025-26 and AY 2026-27. The Income Tax Department’s ITR-1 validation rules for AY 2026-27 confirm this limit.

A salary of ₹12.75 lakh can therefore become taxable income of ₹12 lakh before considering income that is not salary.

For FY 2025-26 and AY 2026-27, the old tax regime permits a standard deduction of ₹50,000 from eligible salary or pension. It can also permit eligible claims such as a House Rent Allowance (HRA) exemption, Section 80C investments including an Equity Linked Savings Scheme (ELSS), certain health-insurance deductions and qualifying house-property treatment.

Each claim has its own conditions, evidence and limit. The presence of an Equated Monthly Instalment (EMI) alone does not establish a home-loan tax claim.

When reconciling records, check three ranges instead of relying on one document. A small difference can come from rounding or a late interest entry.

A medium difference can come from bank interest or a change of employer. A large difference can indicate omitted securities, rent, business receipts or duplicated reporting.

The tax return should follow verified records, not an unexplained pre-filled number. Preserve an income record showing how each reported receipt was accepted, corrected or excluded.

Remember that total taxable income, not gross salary or cash received, determines the ordinary slab calculation.

Compare Form 16 with AIS, Form 26AS, bank statements, broker statements and rent records before calculating tax. Once the total is complete, express every threshold in exact rupees instead of treating “lakhs” as a separate rule.

How do lakh-based limits affect tax?

A lakh-based limit affects tax only when the exact taxable-income condition attached to that limit is satisfied. One lakh equals ₹1,00,000, so 5 lakhs means ₹5,00,000, 12 lakhs means ₹12,00,000 and 24 lakhs means ₹24,00,000.

For FY 2025-26 and AY 2026-27, taxable income up to ₹4 lakh falls in the Nil slab under the new tax regime. The portion above ₹4 lakh and up to ₹8 lakh enters the 5% slab.

The portion above ₹8 lakh and up to ₹12 lakh enters the 10% slab. Amounts above ₹12 lakh and up to ₹16 lakh enter the 15% slab.

Higher portions progress through the 20%, 25% and 30% tax slabs.

A resident individual with eligible taxable income not exceeding ₹12 lakh can receive a Section 87A rebate of up to ₹60,000 under the new tax regime for FY 2025-26 and AY 2026-27. This rebate can reduce ordinary slab tax to Nil at the ₹12 lakh limit.

The basic exemption limit remains ₹4 lakh. For a salaried person with only eligible normal-rate earnings, the ₹75,000 standard deduction can make a gross salary of ₹12.75 lakh correspond to taxable income of ₹12 lakh.

Under the old tax regime for FY 2025-26 and AY 2026-27, a resident individual whose taxable income does not exceed ₹5 lakh can receive a Section 87A rebate of up to ₹12,500. This rebate does not change the underlying ₹2.5 lakh basic exemption for an individual below 60.

It operates after income tax is calculated.

The Income Tax Department lists the ₹60,000 new-regime rebate at the ₹12 lakh limit and the ₹12,500 old-regime rebate at the ₹5 lakh limit in its AY 2026-27 guidance. The same guidance confirms the 4% cess on tax plus surcharge.

Marginal relief under the new tax regime addresses eligible total income slightly above ₹12 lakh. Without this relief, crossing the limit by a small amount could produce a disproportionate increase in tax.

The determination depends on the amount above the threshold and the tax payable under the applicable rules. Calculate it in the AY 2026-27 ITR utility or check it using the Income Tax Department estimator.

Three broad ranges help frame the decision. At a lower taxable amount of up to ₹5 lakh, both regimes can reach Nil ordinary slab tax for an eligible resident individual because of their respective rebates.

In a middle range above ₹5 lakh and up to ₹12 lakh, eligible deductions can materially change the old-regime result, while the new-regime rebate can be decisive up to its limit. At a higher amount above ₹12 lakh, both calculations depend increasingly on marginal slab rates, deductions, special-rate receipts and surcharge thresholds.

These thresholds are useful shorthand when expressed in lakhs, but the ITR calculation must still use exact rupee values. Test the income threshold only after all permitted adjustments have produced the final taxable amount.

Remember that ₹12 lakh is the new-regime rebate threshold for eligible taxable income, not a universal tax-free salary limit.

Check the exact taxable-income field in your ITR instead of rounding ₹12,00,001 down to ₹12 lakh. That exact figure is also essential when you compare each regime.

Which tax regime should you choose?

You should choose the tax regime that produces the lower valid liability after using the same complete records and only the claims you can support. The new tax regime offers wider slabs and a larger standard deduction for salary.

The old tax regime retains a broader set of deductions and exemptions.

Start the comparison with identical gross income. Under the new tax regime, remove only permitted adjustments, including the eligible ₹75,000 standard deduction for salary.

Under the old tax regime, calculate the eligible HRA exemption, the ₹50,000 standard deduction, house-property amounts and each supported Chapter VI-A deduction. Then apply the relevant income tax slabs, rebate, surcharge and 4% cess for FY 2025-26 and AY 2026-27.

This keeps the income calculation consistent before introducing regime-specific adjustments.

The old tax regime can produce a lower result when verified exemptions and deductions are substantial. Relevant claims can include HRA, eligible home-loan interest treatment, Section 80C amounts, health-insurance deductions and other permitted items.

Their effect depends on eligibility, statutory limits and the taxpayer’s facts. Spending ₹1 lakh does not by itself create a ₹1 lakh deduction.

The new tax regime can produce a lower result when old-regime deductions are limited or when its wider slabs and rebate outweigh those claims. It is the default option, but “default” does not mean compulsory for every eligible taxpayer.

The Income Tax Department’s new-versus-old regime FAQs explain the choice and filing conditions.

Taxpayers without business or professional income can generally make the tax regime choice each year through the ITR, subject to the applicable filing rules. A taxpayer with income from business or profession faces different switching conditions.

Choosing the old tax regime can require Form 10-IEA by the applicable due date, and the ability to move between regimes is restricted.

Do not compare the new tax regime using gross income with an old-regime result based on taxable income. That would compare different bases.

Do not count HRA twice by excluding it from salary and also entering it as a deduction. Do not treat TDS as a deduction.

TDS is a tax credit shown after liability is calculated.

A practical three-range comparison uses verified claims instead of a universal break-even figure. A low-deduction case includes little beyond the standard deduction.

A medium-deduction case includes supported rent, insurance or Section 80C amounts. A high-deduction case includes several substantial, legally available claims.

Run all three only if they reflect realistic tax records, because an unavailable deduction cannot support the selection of the old tax regime. Keep the same income inputs in every scenario so that only the permitted regime adjustments differ.

Remember that the better regime is the one with the lower supportable final liability, not necessarily the one with the lower headline rate.

Record the selected tax regime and retain the calculation supporting that choice with your ITR records. The next comparison shows how the two regimes work with complete rupee examples.

How is income tax calculated under each regime?

Income tax is calculated by reducing gross receipts to taxable income, applying progressive slabs, subtracting an eligible rebate, and then adding surcharge and cess before adjusting tax credits. The following examples use FY 2025-26 and AY 2026-27 income tax slabs and assume only normal slab-rate salary.

Example 1: New tax regime with ₹15 lakh salary

Assumptions for this tax estimate:

• Gross salary: ₹15,00,000
• New-regime standard deduction: ₹75,000
• Taxable income: ₹14,25,000
• No special-rate receipts, surcharge or other adjustment

The new-regime tax calculation proceeds as follows:

The Section 87A rebate does not apply in this example because taxable income exceeds ₹12 lakh. Any TDS shown in Form 16 is then credited against the estimated tax liability of ₹97,500.

If TDS exceeds the final liability, the resulting excess can become a refund after the Income Tax Department processes the ITR. If TDS is lower, self-assessment tax can remain payable.

Example 2: New tax regime with ₹12.75 lakh salary

The assumptions for this tax estimate are gross salary of ₹12,75,000, a ₹75,000 standard deduction and taxable income of ₹12,00,000. The slab tax is ₹60,000: ₹20,000 on the portion from ₹4 lakh to ₹8 lakh and ₹40,000 on the portion from ₹8 lakh to ₹12 lakh.

An eligible resident individual can receive a Section 87A rebate of ₹60,000, reducing this ordinary slab tax to Nil.

In lakhs, the gross salary is 12.75 and the taxable amount is 12, but the ITR utility records both amounts in rupees.

This tax example assumes that the income qualifies for the rebate treatment and contains no receipt taxed at a special rate. A capital gain reported in a separate ITR schedule can change the result even when total income is near ₹12 lakh.

Verify the treatment in the official return utility.

Example 3: Old tax regime with ₹15 lakh salary and deductions

Assumptions for this tax estimate:

• Gross salary: ₹15,00,000
• Standard deduction: ₹50,000
• Eligible HRA exemption: ₹2,40,000
• Eligible deductions: ₹2,10,000
• Taxable income: ₹10,00,000
• No special-rate receipts, surcharge or other adjustment

The old-regime tax calculation is ₹12,500 on the portion from ₹2.5 lakh to ₹5 lakh and ₹1,00,000 on the portion from ₹5 lakh to ₹10 lakh. Income tax before cess is therefore ₹1,12,500.

Cess at 4% is ₹4,500, giving an estimated tax liability of ₹1,17,000.

On these stated assumptions, the new-regime estimate of ₹97,500 is lower by ₹19,500. That conclusion applies only to this example.

A larger valid old-regime deduction could reverse the result. A disallowed HRA exemption or deduction would increase the old-regime result.

Recalculate the comparison if salary, interest, rent or another receipt changes.

Remember that a complete tax comparison must use identical earnings and separately verified deductions for each regime.

Reproduce the calculation using the Income Tax Department estimator, then match the estimate to the AY 2026-27 ITR utility. This method makes the tax regime comparison easier to audit.

What does the new tax regime change?

The new tax regime changes the slab widths, default filing position, standard deduction and availability of many exemptions and deductions.

For FY 2025-26 and AY 2026-27, its Nil slab extends to ₹4 lakh, its Section 87A rebate can reach ₹60,000 for eligible taxable income up to ₹12 lakh, and its highest 30% slab begins above ₹24 lakh.

The new tax regime uses six ₹4 lakh bands before the 30% rate applies. Tax is Nil up to ₹4 lakh.

A 5% rate applies above ₹4 lakh and up to ₹8 lakh. A 10% rate applies above ₹8 lakh and up to ₹12 lakh.

A 15% rate applies above ₹12 lakh and up to ₹16 lakh. A 20% rate applies above ₹16 lakh and up to ₹20 lakh.

A 25% rate applies above ₹20 lakh and up to ₹24 lakh. Stated in lakhs, these bands remain shorthand for exact rupee limits.

Many familiar old-regime claims are unavailable under the new tax regime. These generally include the HRA exemption and common deductions under Sections 80C and 80D, subject to the governing law and exceptions.

Some deductions remain available, including qualifying employer contributions under the applicable provision. Check each claim against the relevant ITR field instead of carrying it forward from an old payroll worksheet.

The new tax regime became the default before FY 2025-26, but you should still inspect the option selected in your ITR. A pre-filled or payroll selection does not replace a filing comparison.

The employer’s TDS calculation also does not conclusively determine the regime that an eligible taxpayer without business income must use in the return.

Budget announcements can change tax slabs for a future FY without changing the year currently being filed. Match a Budget headline to its effective date before applying it.

FY 2025-26 is the period in which this income arose, and AY 2026-27 is the period in which the ITR is assessed. From 1 April 2026, the Income-tax Act, 2025 introduces “Tax Year” terminology for later income.

The Income Tax Department explains that transition in its official new Act FAQs. This date distinction also prevents a future income limit or slab from being applied to FY 2025-26 income.

Remember that “new” identifies a tax regime, not permission to apply a future Budget rate to an earlier year.

Confirm the FY or Tax Year displayed at the top of the return utility before entering any slab calculation. The following checks explain what falls under the ordinary income tax slabs and what requires separate treatment.

What falls under the ordinary income tax slabs?

Taxable salary, ordinary house-property income, business or professional profits, and other-source receipts without a special rate generally fall under the ordinary income tax slabs. The applicable treatment still depends on residential status, taxpayer category, age under the old tax regime and the selected option.

Interest from savings accounts or fixed deposits is commonly taxed under income from other sources at slab rates. TDS deducted by a bank does not settle the final tax by itself.

If the slab liability exceeds the TDS credit, additional tax can remain payable. If tax credits exceed the final determination, a refund can arise after processing.

Capital gains require separate attention because some gains are taxed under special provisions instead of the ordinary income tax slabs. Dividends usually enter total income, but surcharge treatment can contain specific limits.

Agricultural receipts can also affect the rate calculation in specified cases even when they are exempt. Classify every income source before applying an ordinary slab or special rate.

At higher total income levels, surcharge begins above ₹50 lakh. For FY 2025-26 and AY 2026-27, published surcharge rates under both regimes include 10% above ₹50 lakh and up to ₹1 crore, 15% above ₹1 crore and up to ₹2 crore, and 25% above ₹2 crore and up to ₹5 crore.

Above ₹5 crore, the maximum general surcharge differs between regimes, subject to special-income restrictions and marginal relief. Use the official AY 2026-27 schedules for the determination.

Frequently asked questions

Is income up to ₹12 lakh completely tax-free under the new regime?

Eligible ordinary-rate taxable income up to ₹12 lakh can result in Nil income tax after the Section 87A rebate under the new tax regime for FY 2025-26 and AY 2026-27. The underlying tax slabs still calculate tax of up to ₹60,000 before the rebate.

Special-rate receipts or ineligibility can change the result.

Is ₹12.75 lakh salary tax-free?

A salaried resident individual with gross salary of ₹12.75 lakh, a ₹75,000 standard deduction and no other taxable receipts can reach taxable income of ₹12 lakh under the new tax regime for FY 2025-26 and AY 2026-27. The eligible rebate can then reduce ordinary slab tax to Nil.

Additional interest, rent or capital gains can change that result.

Are the income tax slabs based on gross income?

The income tax slabs generally apply to taxable income after permitted exemptions and deductions, not automatically to gross salary. The selected tax regime determines which adjustments are available.

Can I claim HRA under the new tax regime?

The House Rent Allowance exemption is generally not available under the new tax regime. If you have a material eligible HRA amount, calculate the old-regime result using your actual salary, rent, location and supporting rent records before selecting a regime.

Does TDS determine my final income tax?

TDS does not determine final income tax because it is a credit against the liability calculated in the ITR. Reconcile Form 16, Form 26AS and AIS, then pay any balance tax or claim the resulting refund through the correct return.

Can I change the tax regime while filing an ITR?

An eligible taxpayer without business or professional income can generally choose the regime through the ITR each year under the applicable rules. A taxpayer with business or professional income must check Form 10-IEA, the filing deadline and the restrictions on switching.

Which ITR should a salaried person use?

The correct ITR depends on receipt type and eligibility, not salary alone. The Income Tax Department’s return applicability guidance explains when ITR-1, ITR-2 or another form applies.

Remember that the ordinary slabs are only one part of the final income tax determination.

Before filing, identify the correct year, reconcile every income source, calculate both eligible regimes, inspect special-rate schedules, verify TDS credits and confirm the result through the Income Tax Department portal.

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