Rates for tax year 2026-27
The Finance Act 2026 left individual rates unchanged from 2025-26. The new regime under s.202 [115BAC] is the default: nil up to ₹4 lakh, then 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above. The old regime keeps nil up to ₹2.5 lakh (₹3 lakh at 60–79, ₹5 lakh at 80+), 5% to ₹5 lakh, 20% to ₹10 lakh and 30% above. Health and education cess is 4% on tax plus surcharge in both.
The ₹12 lakh rebate and marginal relief
Under s.156 [87A] a resident in the new regime with taxable income up to ₹12 lakh gets a rebate of up to ₹60,000, so the tax is nil; add the ₹75,000 standard deduction and a salary of ₹12.75 lakh pays nothing. Just above ₹12 lakh, marginal relief caps the tax at the income in excess of ₹12 lakh, which fades out at about ₹12.7 lakh of taxable income. The old-regime rebate is ₹12,500 up to ₹5 lakh, with no marginal relief. The rebate does not reduce tax on special-rate income such as listed-equity capital gains.
Surcharge
10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and in the old regime only 37% above ₹5 crore (the new regime caps it at 25%). Marginal relief limits the extra tax plus surcharge to the income above each threshold; the calculator applies it.
Which deductions each regime allows
The new regime allows the standard deduction, employer NPS contribution (80CCD(2), up to 14% of basic + DA) and a few others, but not HRA, 80C, 80D, 80CCD(1B) or interest on a self-occupied house. The break-even figure is the total of HRA exemption, home-loan interest and Chapter VI-A deductions at which old-regime tax falls to the new-regime level. Deductions are named by their Income-tax Act 1961 sections (1961 Act reference) because the 2025 Act renumbers them and I have not confirmed each new number from a primary source.
Common questions
Can a salaried person switch regimes every year?
Yes. An individual without business or professional income chooses the regime each year in the return, filed by the due date. With business income, opting out of the new regime is done by a separate form before the due date, and returning to the new regime is allowed only once.
Is income of ₹12.75 lakh really tax-free?
For a salaried resident in the new regime with only slab-rate income, yes: ₹12,75,000 less the ₹75,000 standard deduction is ₹12 lakh, and the s.156 [87A] rebate wipes out the ₹60,000 tax. Capital gains at special rates are still taxed.
Why does the calculator ask for basic + DA?
Employer NPS contribution is deductible only up to 14% of basic + DA in the new regime, and 10% in the old regime for non-government employers. The contribution is first added to salary as a perquisite, so include it in gross salary.
Does age matter in the new regime?
No. The higher basic exemption for senior and super-senior citizens exists only in the old regime.