Income Tax for Salaried in India (Tax Year 2026-27)
From 1 April 2026 the Income-tax Act, 2025 replaced the Income-tax Act, 1961. The biggest visible change is vocabulary: "tax year" replaces "previous year" and "assessment year", so the year running from April 2026 to March 2027 is simply tax year 2026-27. Budget 2026 did not change the slabs. This guide covers how salary is taxed this year, which regime saves more, and which deductions still work.
Updated
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- ToolOld vs new regime calculatorEnter your salary and deductions, see both taxes.
- CompareOld vs new tax regime - which saves more?Worked examples across income brackets.
- Old regimeSection 80C deductions in fullEvery eligible investment under the Rs 1.5L cap.
- Old regimeHRA exemption calculationFormula, worked example, metro vs non-metro.
- Both regimesStandard deduction explainedRs 75k (new) vs Rs 50k (old), and how it is applied.
- ActionITR filing step-by-step guideHow to file ITR-1 for salaried on the e-filing portal.
- ToolSection finder: 1961 Act to 2025 Act80C is now 123, 87A is 156: look up any section.
- Capital gainsCapital gains tax on sale of land12.5% rate, indexation choice, 54EC and 54F.
- ExemptionsExempt income: what is tax-freeAgricultural income, gifts, perks and more.
- RefundsIncome tax refund status and delaysCheck status, fix a stuck refund, interest.
- NoticesReassessment notice: time limitsThe 3- and 5-year limits and how to reply.
Who is liable to pay income tax in India
Every resident individual whose gross total income exceeds the basic exemption limit (Rs 2.5L under the old regime; Rs 4L under the new regime) must file a return and pay tax if a liability arises. Non-residents are taxed only on income earned or received in India. Age matters under the old regime - senior citizens (60-79) get a Rs 3L basic exemption, super seniors (80+) get Rs 5L.
Slabs and rates: new regime (default) - tax year 2026-27
- Standard deduction of Rs 75,000 is available.
- Employer contribution to NPS under section 80CCD(2) up to 14% of basic salary is allowed.
- The rebate (section 87A under the 1961 Act) makes tax nil for taxable income up to Rs 12 lakh; just above that, marginal relief caps the tax at the income in excess of Rs 12 lakh.
- Health and education cess of 4% is added on top of the calculated tax.
| Taxable income slab | Rate |
|---|---|
| Up to Rs 4,00,000 | Nil |
| Rs 4,00,001 - Rs 8,00,000 | 5% |
| Rs 8,00,001 - Rs 12,00,000 | 10% |
| Rs 12,00,001 - Rs 16,00,000 | 15% |
| Rs 16,00,001 - Rs 20,00,000 | 20% |
| Rs 20,00,001 - Rs 24,00,000 | 25% |
| Above Rs 24,00,000 | 30% |
Up to Rs 4,00,000
- Rate
- Nil
Rs 4,00,001 - Rs 8,00,000
- Rate
- 5%
Rs 8,00,001 - Rs 12,00,000
- Rate
- 10%
Rs 12,00,001 - Rs 16,00,000
- Rate
- 15%
Rs 16,00,001 - Rs 20,00,000
- Rate
- 20%
Rs 20,00,001 - Rs 24,00,000
- Rate
- 25%
Above Rs 24,00,000
- Rate
- 30%
Slabs and rates: old regime
- Standard deduction of Rs 50,000 is available.
- Full Section 80C (Rs 1.5L), 80D (medical), 80E (education loan), 80G (donations), HRA, home loan interest, and other deductions apply.
- The rebate makes tax nil for taxable income up to Rs 5 lakh.
| Taxable income slab | Rate |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 - Rs 5,00,000 | 5% |
| Rs 5,00,001 - Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Up to Rs 2,50,000
- Rate
- Nil
Rs 2,50,001 - Rs 5,00,000
- Rate
- 5%
Rs 5,00,001 - Rs 10,00,000
- Rate
- 20%
Above Rs 10,00,000
- Rate
- 30%
Which regime should salaried pick for tax year 2026-27?
For most salaried people, the new regime. The old regime only wins if your deductions are large: at a Rs 15 lakh salary you need about Rs 5,45,000 of deductions just to break even, and from about Rs 25 lakh upwards the figure settles near Rs 8,01,000. A self-occupied home loan (Rs 2L), full 80C (Rs 1.5L), 80D and NPS together rarely get there without a large HRA claim. Our old vs new regime guide has worked examples and a break-even table by salary.
Common deductions salaried Indians use (old regime only)
The limits below are unchanged under the Income-tax Act, 2025, but each deduction now sits under a new section number. The familiar 1961 Act names are used here because that is what most Form 16s, employers and search results still use. In the new Act, 80C is section 123, 80D is section 126 and 24(b) is section 22; our section finder lists the rest.
- Section 80C (Rs 1.5L): PF, ELSS mutual funds, PPF, life insurance premium, home loan principal, tuition fee.
- Section 80D (up to Rs 1L): Medical insurance premium - Rs 25k for self and family under 60, Rs 50k if senior citizen; Rs 50k separately for parents if senior citizen.
- Section 24(b) (Rs 2L): Home loan interest on self-occupied property.
- Section 80E (no cap): Interest on education loan for higher studies, for 8 years.
- Section 80CCD(1B) (Rs 50k): Additional NPS contribution over and above 80C.
- HRA exemption (formula-based): For rented accommodation - see the HRA guide.
When and how to file ITR
Returns for tax year 2026-27 are due by 31 July 2027 for most salaried filers. If you have not yet filed for FY 2025-26 (the last year under the 1961 Act), the 31 July 2026 due date has passed, but a belated return can still be filed until 31 December 2026 with a late fee. For salary and simple interest income, ITR-1 (Sahaj) is usually the right form. File free on incometax.gov.in - see the ITR filing guide for the step-by-step process.
Frequently asked questions
I missed the 31 July 2026 deadline for FY 2025-26. What now?
You can still file a belated return until 31 December 2026. The late fee is Rs 5,000, or Rs 1,000 if total income is up to Rs 5 lakh, plus interest on any unpaid tax.
What does "tax year" mean?
Under the Income-tax Act, 2025, the tax year is the April-March financial year in which you earn the income. It replaces the old pair of "previous year" (when income was earned) and "assessment year" (the year after, when it was assessed). Income earned from April 2026 to March 2027 belongs to tax year 2026-27.
Can I switch between old and new regime every year?
Yes, if your only source of income is salary. You choose the regime at the time of filing by ticking the relevant option in ITR-1. Taxpayers with business or professional income can switch only once.
Is standard deduction available in the new regime?
Yes. Salaried taxpayers get a Rs 75,000 standard deduction under the new regime (Rs 50,000 under the old regime). It is applied automatically.
Do I need to invest under 80C in the new regime?
No. Section 80C deductions are not available under the new regime, so the tax-saving reason to buy ELSS / PPF / insurance disappears. Continue investing only if the underlying product suits your goals independently of tax.
What is the section 87A rebate?
It is the rebate that makes your tax nil if taxable income is up to Rs 5 lakh (old regime) or Rs 12 lakh (new regime). The 2025 Act moves it to section 156 but the limits are unchanged, and it is applied automatically when you file.
Sources & references
- Income Tax India - e-filing portal — Income Tax Department, Government of India
- Provisions of the Income-tax Act, 1961 vis-a-vis Income-tax Act, 2025 — CBDT
- Union Budget 2026-27 — Ministry of Finance, GoI
- Central Board of Direct Taxes - circulars & notifications — CBDT
Rates, fees, eligibility, and product terms cited on this page reflect the sources above at the time of publication and may have changed since. Always verify directly with the lender or regulator.