Income Tax Calculator India FY 2026-27 — Old vs New Regime
The most consequential tax decision most salaried Indians make each year takes four minutes and happens in April: declaring your regime to your employer. Default to the new regime without checking your deductions, and you may overpay for an entire financial year — the refund arrives six to twelve months later. Declare old regime without verifying the maths, and you may underpay and face a tax demand at filing.
Under the new regime for FY 2026-27, the Section 87A rebate cancels all tax on income up to ₹12 lakh. For salaried employees, the ₹75,000 standard deduction under the new regime pushes this to ₹12.75 lakh gross salary with zero tax — making the new regime the clear winner for most people below that threshold. Above ₹15 lakh, the decision depends entirely on what you can legitimately claim: HRA exemption, Section 24(b) home loan interest, PPF and ELSS under 80C, and NPS under 80CCD(1B). This calculator runs both computations on your actual numbers — you should not guess.
Income Tax Slabs FY 2026-27 (New Regime)
| Income Range | Tax Rate |
|---|---|
| Up to ₹4L | 0% |
| ₹4L – ₹8L | 5% |
| ₹8L – ₹12L | 10% |
| ₹12L – ₹16L | 15% |
| ₹16L – ₹20L | 20% |
| ₹20L – ₹24L | 25% |
| ₹24L – Above | 30% |
Rebate u/s 87A: Full rebate u/s 87A — zero tax for income up to ₹12 lakh. Standard deduction: ₹75,000.
How Indian Income Tax Is Actually Computed — Step by Step
The tax computation has five steps that every salaried taxpayer should understand before choosing a regime:
- Gross income: Total salary, rental income, capital gains, and other income before any deductions.
- Subtract standard deduction: ₹75,000 under new regime; ₹50,000 under old regime (salaried and pensioners only).
- Subtract other deductions (old regime only): 80C (up to ₹1.5L), 80D (up to ₹75K for self+senior parents), HRA exemption, Section 24(b) home loan interest (up to ₹2L), NPS under 80CCD(1B) (up to ₹50K), and others.
- Apply slab rates to arrive at base income tax.
- Apply Section 87A rebate (if eligible): cancels the entire computed tax — not a deduction from income, but from tax itself. New regime: full rebate if taxable income ≤ ₹12L. Old regime: full rebate if taxable income ≤ ₹5L after all deductions.
- Add surcharge (for incomes above ₹50L) and 4% health and education cess on (tax + surcharge).
The 87A cliff effect: The rebate is binary — it applies fully or not at all. A taxable income of ₹12,00,000 under the new regime: zero tax. A taxable income of ₹12,00,001: tax of approximately ₹60,000 + cess. There is no gradual phase-out. This creates a genuine cliff at ₹12L that makes it worth structuring salary to stay below if possible (for example, by maximising employer NPS contributions under Section 80CCD(2), which reduces taxable income even in the new regime).
Use the NPS Calculator to model how employer NPS contributions (Section 80CCD(2)) reduce taxable income under both regimes. Use the HRA Calculator to find your exact exempt amount before entering it here.
Three Income Profiles That Show When Each Regime Wins
Scenario 1: Meera, ₹10 lakh salary — new regime wins decisively
Meera earns ₹10 lakh gross salary. Under the new regime: gross ₹10L minus standard deduction ₹75K = taxable income ₹9.25L. Tax on slabs: ₹0 (0–4L) + ₹20K (5% on 4–8L) + ₹12,500 (10% on 8–9.25L) = ₹32,500. But taxable income is ₹9.25L, which is below the ₹12L 87A rebate limit — full rebate applies, tax = ₹0.
Under old regime with maximum 80C (₹1.5L): taxable income ₹10L minus ₹50K standard deduction minus ₹1.5L 80C = ₹8L. Tax: ₹0 (0–2.5L) + ₹12,500 (5% on 2.5–5L) + ₹60,000 (20% on 5–8L) = ₹72,500. Taxable income ₹8L is above the ₹5L 87A limit, so tax = ₹72,500 + 4% cess = ₹75,400.
New regime saves ₹75,400 at ₹10L salary even when maximum 80C is deployed in the old regime.
Scenario 2: Suresh, ₹20 lakh salary — the break-even analysis
Suresh earns ₹20L gross. He has: 80C ₹1.5L, HRA exemption ₹2.4L, Section 24(b) home loan interest ₹2L, 80D health insurance ₹50K, NPS 80CCD(1B) ₹50K. Total deductions under old regime: ₹6.9L + standard deduction ₹50K = ₹7.4L.
- New regime: Taxable income ₹20L − ₹75K standard deduction = ₹19.25L. Tax: ₹0 + ₹20K + ₹40K + ₹60K + ₹58,750 (20% on ₹19.25L − ₹16L = ₹3.25L × 20% = ₹65K — wait, ₹19.25L − ₹16L = ₹3.25L at 20% = ₹65K) = approx ₹1,85,000 + 4% cess = ₹1,92,400.
- Old regime: Taxable income ₹20L − ₹7.4L = ₹12.6L. Tax: ₹0 + ₹12,500 + ₹1,00,000 + ₹78,000 (30% on ₹12.6L − ₹10L = ₹2.6L) = ₹1,90,500 + 4% cess = ₹1,98,120.
At ₹20L with ₹7.4L in deductions, both regimes are nearly identical — the new regime saves ₹5,720. Suresh should choose the new regime for simplicity; if HRA increases or he gets a higher rate home loan, the old regime may become marginally better. The calculator runs the exact maths on your specific numbers.
Scenario 3: Rekha, ₹30 lakh salary — old regime wins with full deductions
Rekha earns ₹30L gross. Old regime deductions: 80C ₹1.5L, 80D ₹75K (senior citizen parents), HRA ₹3.6L, Section 24(b) ₹2L, NPS 80CCD(1B) ₹50K = ₹8.35L + ₹50K standard deduction = ₹8.85L total deductions.
- New regime: Taxable ₹30L − ₹75K = ₹29.25L. Tax = ₹0 + ₹20K + ₹40K + ₹60K + ₹80K + ₹1,00K + ₹1,57,500 (30% on ₹29.25L − ₹24L = ₹5.25L) = ₹4,57,500 + cess = ₹4,75,800.
- Old regime: Taxable ₹30L − ₹8.85L = ₹21.15L. Tax = ₹0 + ₹12,500 + ₹1,00,000 + ₹3,34,500 (30% on ₹21.15L − ₹10L = ₹11.15L) = ₹4,47,000 + cess = ₹4,64,880.
Old regime saves ₹10,920 — a modest but real saving. As HRA or home loan interest increase, the old regime advantage grows. At ₹30L income with ₹10L+ in deductions, old regime wins by ₹50,000–₹80,000.
FY 2026-27 Tax Rules, Deduction Limits & Regime Framework
New regime as default: From FY 2024-25 onwards, the new tax regime is the default for all taxpayers. If you do not declare your regime to your employer at the start of the financial year, TDS will be deducted under the new regime. Salaried employees can switch regimes each year at ITR filing time; self-employed individuals can switch from old to new only once (and cannot switch back).
Standard deduction: ₹75,000 under the new regime (enhanced from ₹50,000 in Budget 2024). ₹50,000 under the old regime. Available to salaried employees and pensioners. No other deductions are allowed under the new regime other than standard deduction and employer NPS (Section 80CCD(2)).
Section 87A rebate (FY 2026-27): Under the new regime, the rebate equals the full tax computed on income up to ₹12 lakh (taxable income, after standard deduction). If taxable income exceeds ₹12 lakh by even ₹1, the rebate does not apply and the full slab-rate tax becomes payable from zero income. Under the old regime, the rebate applies if taxable income after all deductions is ₹5 lakh or below, cancelling the ₹12,500 tax that would otherwise apply.
Old regime deduction limits (FY 2026-27): Section 80C: ₹1,50,000 combined (PPF, ELSS, EPF employee share, LIC premium, home loan principal, tuition fees for up to 2 children). Section 80D: ₹25,000 for own health insurance (₹50,000 if you are a senior citizen) + ₹25,000 for parents' health insurance (₹50,000 if parents are senior citizens). Section 24(b): ₹2,00,000 for home loan interest on self-occupied property. Section 80CCD(1B): ₹50,000 for own NPS Tier I contributions — exclusive to NPS, not available in new regime. HRA: under Section 10(13A), exemption as computed by the three-formula minimum rule.
Surcharge rates (both regimes): Income ₹50L–₹1Cr: 10% surcharge on tax. ₹1Cr–₹2Cr: 15%. ₹2Cr–₹5Cr: 25%. Above ₹5Cr: 25% (capped at 25% from Budget 2023, was 37% earlier). Health and education cess: 4% on (base tax + surcharge) for all taxpayers.
Employer NPS (80CCD(2)) — the new-regime exception: Employer contributions to NPS under Section 80CCD(2) are deductible even in the new tax regime. The limit is 10% of basic salary for private sector employees and 14% for central government employees. This makes employer-offered NPS contributions one of the few deductions available to new-regime taxpayers beyond the standard deduction.
What Most Taxpayers Get Wrong About the Two Regimes
Assuming the new regime is always better. The new regime wins for most people below ₹12.75L gross salary (where the 87A rebate eliminates tax) and for those with minimal deductions. But above ₹15L, taxpayers with significant HRA (typically in metro cities), home loan interest, and full 80C/80CCD(1B) utilisation may pay less under the old regime. The break-even deduction level changes with income — calculate it, do not assume.
The ₹12L cliff trap. Under the new regime, ₹12L in taxable income means zero tax (87A rebate). ₹12,00,001 means approximately ₹60,000 in tax — on the entire income from ₹0, not just on the ₹1 above ₹12L. If your salary is projected to be ₹12.1L or ₹12.3L, consider whether additional contributions to employer NPS (80CCD(2)) can bring taxable income below ₹12L. ₹50,000 in employer NPS that saves ₹60,000 in tax is a 120% return on that ₹50,000.
Claiming Section 24(b) under the new regime. Home loan interest deduction (Section 24(b), up to ₹2L for self-occupied) is not available under the new tax regime. Borrowers who switch to the new regime mid-loan lose this deduction for all future years they stay in the new regime. Model this in the calculator before switching.
Counting ELSS SIP as a new-regime benefit. Section 80C deductions — including ELSS, PPF, and EPF employee share — are only available under the old regime. Investors who opt for the new regime receive zero tax benefit from ELSS SIPs. The investment itself is not affected, but the tax saving disappears. New-regime taxpayers should compare ELSS expense ratios against plain index funds (lower expense) and decide on investment merits alone, not tax benefits.
Not filing ITR to claim refunds from over-deducted TDS. If you declared the new regime to your employer but at ITR filing time determine the old regime was better, you can file under the old regime and claim a refund of excess TDS. This requires filing before the due date. The same applies in reverse — if old regime was declared but new regime computes to lower tax, the excess deducted as TDS is refunded via the ITR filing process.
Frequently Asked Questions
What are the income tax slabs for FY 2026-27 under the new regime?
New regime tax slabs for FY 2026-27: 0–₹4L at 0%; ₹4L–₹8L at 5%; ₹8L–₹12L at 10%; ₹12L–₹16L at 15%; ₹16L–₹20L at 20%; ₹20L–₹24L at 25%; above ₹24L at 30%. Income up to ₹12 lakh (after standard deduction) is effectively tax-free due to the Section 87A rebate. A standard deduction of ₹75,000 applies to salaried employees and pensioners.
What is the income tax limit for FY 2026-27 — how much income is tax-free?
Under the new tax regime for FY 2026-27, income up to ₹12 lakh is effectively tax-free due to the Section 87A rebate. For salaried individuals, the ₹75,000 standard deduction extends this to a gross salary of ₹12.75 lakh with zero tax payable. Under the old regime, income up to ₹5 lakh (after all deductions including standard deduction and 80C investments) qualifies for the 87A rebate, with tax cancelled entirely — but your gross income must be well above ₹5L for the old regime to be relevant.
How much income tax do I pay on ₹10 lakh income in FY 2026-27?
Under the new tax regime: gross ₹10L minus ₹75K standard deduction = taxable income ₹9.25L. This is below the ₹12L rebate threshold, so the Section 87A rebate cancels all tax — you pay zero. Under the old regime with no deductions other than ₹50K standard deduction: taxable income ₹9.5L. Tax = ₹0 + ₹12,500 (5% on ₹2.5–5L) + ₹90,000 (20% on ₹5–9.5L) = ₹1,02,500 + 4% cess = ₹1,06,600. The new regime is clearly better at ₹10L regardless of deductions — the 87A rebate produces zero tax.
What deductions are allowed under the old tax regime in FY 2026-27?
The old tax regime allows: Section 80C up to ₹1.5L (EPF, PPF, ELSS, LIC premiums, home loan principal, tuition fees); Section 80D up to ₹25K for own health insurance + ₹25K for parents (₹50K each if senior citizens); HRA exemption under Section 10(13A); Section 24(b) up to ₹2L for home loan interest on self-occupied property; Section 80CCD(1B) — additional ₹50K for NPS over and above 80C; LTA (Leave Travel Allowance); Section 80TTA up to ₹10K for savings account interest; and several other Chapter VI-A deductions. The new regime allows none of these except the ₹75K standard deduction.
Is the ₹75,000 standard deduction available in the new tax regime?
Yes. A standard deduction of ₹75,000 is available to salaried employees and pensioners under the new tax regime from FY 2024-25 onwards (enhanced from ₹50,000 by Budget 2024). This is the only meaningful deduction available in the new regime for most salaried employees. The old regime also offers the standard deduction, but at the lower ₹50,000 amount. No HRA, 80C, 80D, Section 24(b), or 80CCD(1B) deductions apply in the new regime.
What is the surcharge on income tax for high earners in India?
Surcharge applies on income above ₹50 lakh: ₹50L–₹1Cr: 10% surcharge on the base tax; ₹1Cr–₹2Cr: 15%; ₹2Cr–₹5Cr: 25%; above ₹5Cr: 25% (reduced from 37% by Budget 2023 for both regimes). A health and education cess of 4% applies on (base tax + surcharge) for all taxpayers regardless of income level. Marginal relief prevents the tax-plus-surcharge from exceeding the income above the threshold at each surcharge band.
Do I need to declare my tax regime to my employer at the start of the year?
Yes. At the start of each financial year (April), inform your employer which tax regime you want applied for TDS calculation. If no declaration is made, TDS defaults to the new regime from FY 2024-25 onwards. The declaration affects your monthly take-home salary for the entire year — if you declare the wrong regime, you either overpay TDS (get refund later) or underpay (pay the balance at ITR filing). Salaried employees can change the regime at the time of ITR filing, but the monthly TDS impact is felt throughout the year.
How does the Section 87A rebate work — is it applied to income or to tax?
Section 87A is a rebate applied to the computed tax, not a deduction from income. The process: (1) Compute taxable income (after standard deduction and other deductions in old regime). (2) Apply slab rates to compute base tax. (3) If taxable income ≤ ₹12L (new regime) or ≤ ₹5L (old regime after deductions), cancel the entire base tax via the 87A rebate. (4) Add cess. If income exceeds the threshold by even ₹1, step (3) does not apply and the full slab-rate tax is payable. This creates a hard cliff at ₹12L in the new regime — not a gradual reduction.