The new financial year 2026-27 has started today (April 1), bringing renewed focus on income tax planning for FY27. While the broader tax framework has been revamped under the new Income-tax Act, 2025,
the income tax slab rates remain unchanged. Here are the current tax rates and slabs for 2026-27:
Default New Tax Regime
- Up to Rs 4 lakh: Nil
- Rs 4 lakh to Rs 8 lakh: 5%
- Rs 8 lakh to Rs 12 lakh: 10%
- Rs 12 lakh to Rs 16 lakh: 15%
- Rs 16 lakh to Rs 20 lakh: 20%
- Rs 20 lakh to Rs 24 lakh: 25%
- Above Rs 24 lakh: 30%
Old tax regime slabs (FY27)
The old regime continues with the traditional slab structure:
- Up to Rs 2.5 lakh: Nil
- Rs 2.5 lakh to Rs 5 lakh: 5%
- Rs 5 lakh to Rs 10 lakh: 20%
- Above Rs 10 lakh: 30%
Slab rates vary for senior (60+) and super senior citizens (80+).
What has changed this year?
Despite the rollout of the new tax framework, there is no change in slab rates for FY27. The reforms are focused more on simplification and restructuring, rather than altering tax rates. However, several exemptions and deductions under the old regime have been enhanced, which could influence taxpayers’ choices.
Chartered accountant Suresh Surana said, “With the Income-tax Act, 2025, (ITA 2025) and the Income-tax Rules, 2026, (IT Rules, 2026) coming into effect from April 1, 2026, taxpayers are once again comparing the old and new tax regimes to see which one is more tax-efficient for tax year 2026-27. The discussion has gained fresh attention mainly because several long-standing exemptions and deductions have been increased under the new rules. These changes can significantly impact tax calculations, especially for taxpayers who continue to opt for the old regime.”
A key reason for this renewed focus in the old tax regime is increase in exemption limits and the expansion of certain benefits. For instance, the higher 50% HRA exemption limit, which was earlier available only for select metro cities, has now been extended to Bengaluru, Hyderabad, Pune and Ahmedabad as well. In addition, the exemption limits for children’s education allowance and hostel allowance have been increased, while revisions have also been made to leave travel allowance (LTA/LTC) and other salary-related perquisites. These changes make the old regime more attractive for taxpayers who actively claim such deductions, he added.
“As a result, the old tax regime may now be more beneficial for salaried taxpayers who typically claim deductions such as HRA, home loan interest, Section 80C investments, Section 80D health insurance premium, and NPS contributions. For such taxpayers, the revised exemptions can significantly reduce taxable income and improve overall tax efficiency,” Surana said.
At the same time, it is also important to note that there has been no change in the tax slab rates for tax year 2026-27. The recent reforms are primarily focused on simplifying and modernising the tax framework rather than increasing or reducing the overall tax burden. As a result, the choice between the two regimes will continue to depend largely on the nature and quantum of deductions and exemptions available to each individual taxpayer. Hence, for individuals who do not generally claim substantial deductions or exemptions, the new tax regime is likely to remain the more tax-efficient option, as it continues to offer lower slab rates along with the higher standard deduction, he added.
“Accordingly, the recent changes should not be construed as automatically increasing or reducing the tax liability for all taxpayers. Instead, they reinforce the need for individuals to recompute their tax liability under both the old and the new tax regimes before making their annual choice. The more tax-efficient option will continue to depend on each taxpayer’s salary structure, eligible exemptions and deductions, and overall investment profile,” said Surana.
Accordingly, for FY2025-26 (AY 2026-27), taxpayers will continue to be governed by the existing provisions of the Income-tax Act, 1961 and the Income-tax Rules, 1962. The revised framework will take effect only from April 1, 2026. and will therefore apply to tax computations from TY 2026-27 and onwards, he added.
