Income tax slabs are among the most closely watched announcements in every Union Budget. In Budget 2026, many individual taxpayers were hoping for a revision in tax slabs that could lower their tax burden for the upcoming financial year. However, those expectations were not met.
While presenting Budget 2026, Finance Minister Nirmala Sitharaman announced no changes in income tax slabs under either the old tax regime or the new tax regime for the Financial Year 2026–27 (Assessment Year 2027–28).
This means taxpayers will continue to be taxed under the same slab structure and rates that were applicable earlier, with no increase in exemption limits or revision in tax percentages.
New Tax Regime: Income Tax Slabs for FY 2026–27
Under the new tax regime, income tax slabs are uniform for all taxpayers, irrespective of age.
| Taxable Income | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
A major relief under the new regime continues to be the tax rebate under Section 87A, which makes income up to ₹12 lakh tax-free after a rebate of up to ₹60,000.
For salaried taxpayers, a standard deduction of ₹75,000 is available, effectively making salary income up to ₹12.75 lakh tax-free.
Old Tax Regime: Income Tax Slabs for FY 2026–27
Unlike the new regime, the old tax regime has age-based slabs.
1) Individuals below 60 years
| Taxable 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% |
2) Senior citizens (60 to below 80 years)
| Taxable Income | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
3) Super senior citizens (80 years and above)
| Taxable Income | Tax Rate |
|---|---|
| Up to ₹5,00,000 | Nil |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Surcharge Rates for FY 2026–27
| Total Income | New Regime | Old Regime |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| ₹50 lakh – ₹1 crore | 10% | 10% |
| ₹1 crore – ₹2 crore | 15% | 15% |
| ₹2 crore – ₹5 crore | 25% | 25% |
| Above ₹5 crore | 25% | 37% |
Under the new tax regime, surcharge continues to be capped at 25%, even for very high-income earners. In contrast, the old regime attracts a higher surcharge of 37% for income above ₹5 crore.
Health and Education Cess
In both regimes, a 4% health and education cess is levied on the total tax payable after adding the applicable surcharge.
What This Means for Taxpayers
With no change in income tax slabs, taxpayers must continue to assess which tax regime—old or new—best suits them based on:
- Income level
- Eligible deductions and exemptions
- Long-term financial planning
For FY 2026–27, the government has chosen stability over structural changes, giving taxpayers continuity rather than surprise revisions in tax rates.
Originally published on 24×7-news.com.
