Income Tax Slabs for FY 2026-27 (AY 2027-28)

In assessment year 2027-28, the income tax slab and rates for FY 25-26

Similarly, the basic exemption limit under the new tax regime for this category of individual taxpayers has been retained at ₹4 lakh for FY 26-27. In AY 27-28, the new tax regime continues to be the default regime similar to the previous AY 26-27. Taxpayers can however choose to file returns under either tax regime

The below table shows the income tax slab and rates for assessment year 2027-28 under the old tax regime and the new regime in the case of individual tax payers who are less than 60 years:

As you can see, in the case of individual tax payers aged less than 60 years, the new tax regime continues to offer a larger number of slabs and lower rates up to a higher income compared to the old tax regime. It must however be kept in mind that relatively fewer deductions under new tax regime are available compared to the old tax regime.

Taxpayers designated as Hindu Undivided Family (HUF) and Non-Resident Indians (NRIs) are eligible to opt for the new tax regime, just like individual tax payers. The income tax slab rates applicable in the case of case of NRI and HUF tax payers in FY 26-27 and AY 27-28 are as shown below:

So, HUFs and NRIs taxpayers can opt for the new tax regime in AY 27-28 to avail the benefits of higher exemption limit and lower tax rates as compared to the old tax regime. While these taxpayers are allowed to choose either tax regime, in AY 27-28, the new tax regime is the default tax regime for HUF and NRI tax payers.

Under the old tax regime, senior citizen taxpayers aged between 60 years and 79 years are eligible to benefit from a higher basic exemption limit of ₹3 lakh compared to younger individual tax payers. However, as per the current tax rules under Section 115 BAC, a similar benefit is not applicable if senior citizen tax payers opt for the new tax regime.

The below table illustrates the income tax slabs and rates under both tax regimes for senior citizen taxpayers in Assessment Year 2027-28:

The details shown in the above table illustrates that senior citizens too can avail the benefit of comparatively lower tax rates offered under the new tax regime. The new tax regime is also the default tax regime for senior citizen taxpayers, however, they are free to choose and file taxes under either tax regime.

Super senior citizens are individuals aged 80 years and older. These taxpayers get a basic exemption limit of 5 lakhs under the old tax regime i.e. they are exempt from income tax if their annual income is 5 years or lower. As per current tax rules, the new tax regime features a basic exemption limit of ₹4 lakh in AY 27-28, which is at par with that of other individuals tax payers.

The below table summarises the income tax slabs and rates applicable to super senior citizen tax payers in FY 26-27 under both tax regimes:

As you can see, in the case of super senior citizen taxpayers, while a higher exemption limit is applicable under the old tax regime, the new tax regime offer the benefit of lower tax rates.

In AY 27-28, the standard deduction applicable under both tax regimes have been retained at the same level as the previous fiscal. So, under the old tax regime, standard deduction will continue to be applicable at a flat ₹50,000 in FY 26-27.

The new tax regime will continue to offer a higher standard deduction of ₹75,000 in FY 26-27. This tax deduction can be availed by salaried individuals and pensioners without the need for any investment. However, other key groups of taxpayers such as self-employed individuals, Hindu Undivided Family (HUFs), Association of Persons (AoPs), etc. are not eligible to claim standard deduction.

Rebate under Section 87A is designed to reduce the tax burden of individuals earning relatively lower annual incomes. In assessment year 2027-28, the rules regarding applicability of Section 87A has been kept the same as in the previous AY 26-27.

For those filing under the old tax regime, the annual net taxable income limit for availing Section 87A benefit has been retained at ₹5 lakh. So, taxpayers opting for the old tax regime with net taxable income of ₹5 lakh or lower in FY 26-27 are eligible for rebate up to the limit of ₹12,500 currently allowed u/s 87A.

In previous year’s budget, the scope of Section 87A rebate was enhanced for those opting for the new tax regime and this enhanced benefit is applicable for AY 2027-28. This means that under the new tax regime individual tax payers are eligible to avail rebate u/s 87A up to a net annual taxable income of ₹12 lakh for the fiscal. So, a maximum Section 87A rebate of ₹60,000 is currently available under the new tax regime.

As a result of Section 87A rebate, tax payers have to pay net zero tax in case their net taxable income is ₹5 lakh or lower in FY 26-27. Similarly, those opting for the new tax regime will pay net zero tax if their net annual taxable income is ₹12 lakh or lower in the fiscal.

Surcharge on income tax is applicable to taxpayers who have annual income of ₹50 lakh or higher. This is also applied in progressive slabs so those with higher annual income have to pay surcharge at a higher rate. The surcharge on income tax applicable in FY 26-27 looks like this:

As you can see, the surcharge on income tax is capped at 25% under the new tax regime. On the other hand, taxpayers with high income may have to pay a maximum surcharge rate of 37% on computed income tax, if they have opted for the old tax regime.

Budget for FY 2026-27 did not make any changes to income tax slab rates and other key aspects such as cess, surcharge, rebate u/s 87A, etc. But, there were some changes in other aspects of the direct tax regime. Below are a few key ones to keep in mind:

• Revised income tax return can now be filed up to 31 March instead of the earlier 31 December deadline, but a fee will be charged
• Income Tax Act 2025 will come into effect from April 1, 2026. This will simplify key provisions of the current Income Tax Act and also new ITR forms will be introduced
• Eligible taxpayers will be allowed to submit Form 15G and Form 15H with depositories to reduce their TDS burden on dividends, interest, etc.
• TAN will no longer be mandatory for TDS on property transactions involving Non-resident Indians. A new challan based on the PAN of resident buyer will be introduced
• Securities Transaction Tax (STT) on futures has been increased to 0.05% from the earlier level of 0.02%
• Securities Transaction Tax (STT) on options premium has been increased to 0.15% from the earlier level of 0.10%
• Securities Transaction Tax (STT) on options premium has been increased to 0.15% from the earlier level of 0.05%
• All non- residents who pay tax on presumptive basis will now be exempt for Minimum Alternate Tax (MAT)

While unlike the previous budget, no major changes were announced, Budget for FY 2026-27 has shown an increased focus on making compliance simpler for the general public. This is exemplified with the applicability of the revamped Income Tax Act, 2025 that is designed to increase the ease of filing for a wide range of taxpayers.