What is Income Tax in India?
Income tax is a direct tax levied by the Central Government of India on the taxable income earned by
individuals, Hindu Undivided Families (HUFs), firms, and corporations during a financial year. Income tax
rates are progressive, meaning higher income earners pay a larger percentage of their income in tax.
The Indian Tax Department categorizes income into five primary heads: Income from Salary, Income from House
Property, Profits from Business/Profession, Capital Gains, and Income from Other Sources (interest,
dividends, lottery winnings).
Income Tax Slabs for FY 2026–27 & FY 2025–26
Taxpayers in India can choose between the New Tax Regime (default regime with concessional
tax rates and fewer exemptions) and the Old Tax Regime (higher tax rates with deductions
under Section 80C, 80D, HRA, and home loan interest).
1. New Tax Regime Slabs (FY 2026–27)
Standard deduction of ₹75,000 is applicable for salaried individuals and pensioners. Full tax rebate
under Section 87A applies to net taxable income up to ₹12,00,000 (making gross salary up to ₹12.75 Lakhs completely tax-free!).
| Net Taxable Income Slab |
New Tax Rate |
| Up to ₹4,00,000 |
NIL (0%) |
| ₹4,00,001 to ₹8,00,000 |
5% |
| ₹8,00,001 to ₹12,00,000 |
10% |
| ₹12,00,001 to ₹16,00,000 |
15% |
| ₹16,00,001 to ₹20,00,000 |
20% |
| ₹20,00,001 to ₹24,00,000 |
25% |
| Above ₹24,00,000 |
30% |
2. Old Tax Regime Slabs (Below 60 Years)
Standard deduction of ₹50,000 applies for salaried employees. Full tax rebate under
Section 87A applies up to ₹5,00,000 taxable income.
| Net Taxable Income Slab |
Old Tax Rate |
| Up to ₹2,50,000 |
NIL (0%) |
| ₹2,50,001 to ₹5,00,000 |
5% |
| ₹5,00,001 to ₹10,00,000 |
20% |
| Above ₹10,00,000 |
30% |
Old vs New Tax Regime: Which is Better for You?
The choice between the Old and New Tax Regime depends on your total annual deductions. If your total tax
deductions under Section 80C, 80D, HRA, and Section 24b exceed ₹3,75,000, the Old Regime
usually results in lower tax. If you do not have significant investments, the New Tax Regime is far more
beneficial due to lower slab rates.
| Feature |
New Tax Regime |
Old Tax Regime |
| Standard Deduction |
₹75,000 |
₹50,000 |
| Section 80C (PPF, ELSS) |
❌ Not Allowed |
✅ Allowed (up to ₹1,50,000) |
| Section 80D (Health Insurance) |
❌ Not Allowed |
✅ Allowed (up to ₹1,00,000) |
| House Rent Allowance (HRA) |
❌ Not Allowed |
✅ Allowed |
| Home Loan Interest (Sec 24b) |
❌ Not Allowed (Self-occupied) |
✅ Allowed (up to ₹2,00,000) |
| Zero Tax Threshold |
Gross Income up to ₹7.75 Lakhs |
Gross Income up to ₹5.50 Lakhs |
Frequently Asked Questions (FAQs)
Which tax regime is better for FY 2026–27?
For most taxpayers who don't claim high deductions, the New Tax Regime is better due to lower rates and
₹75,000 standard deduction. However, if your total deductions (80C, 80D, HRA, Home Loan Interest) exceed
₹3,75,000, the Old Tax Regime may save more money.
Is standard deduction available in both regimes?
Yes. Under Budget updates for FY 2025–26 & FY 2026–27, salaried employees get a ₹75,000 standard
deduction under the New Tax Regime and ₹50,000 under the Old Tax Regime.
Is this Income Tax Calculator accurate?
Yes, our calculator uses the latest Income Tax Act rules, including Section 87A tax rebates, age-based
basic exemption limits, slab thresholds, and 4% Health & Education Cess.
How is 4% Health & Education Cess calculated?
Health & Education Cess is calculated as 4% of your total base income tax payable after applying any
Section 87A rebate or surcharge.