New Tax Regime Slabs and Rebate

Rule summary · verified 2026-10-10

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What changed since last year

The official rate schedule opened for this entry covers AY 2025–26 and AY 2026–27; the linked Finance Act material describes the applicable new-regime bands.

In plain language

Apply each rate only to the slice of taxable income in that band. Check eligibility, rebate, surcharge, cess, and special-rate income separately.

Scope: assessment year 2026–27

This page summarizes the individual new-regime rate schedule published for Assessment Year 2026–27. It is not a rate forecast for a later assessment year and does not assume that every person is eligible for the same deductions, rebate, or tax treatment. Match the assessment year to the income period printed on the official return guidance. The Department's rate page and the Finance Act source are linked below. If the law or official portal changes after the verification date, use the newer primary source and do not carry this table forward by habit.

Apply slabs progressively

A slab schedule is marginal: each rate applies to the slice of taxable income inside that band, not to the entire amount once a threshold is crossed. Calculate taxable income first, then allocate each portion to the matching band. The rate rows are not a take-home-pay table; they exclude the effect of eligible deductions, rebate, surcharge, cess, tax credits, withholding, and special-rate income. Keep the amount and assessment year beside the calculation. A calculator that multiplies total income by the highest applicable percentage will overstate the basic slab tax.

Treat rebate as a separate step

For AY 2026–27, the Department says the maximum new-regime Section 87A rebate is ₹60,000 for an eligible resident individual with total income up to ₹12 lakh. Special-rate income such as specified capital gains is excluded from the rebate calculation, and marginal relief can matter just above the threshold. Rebate is relief after tax computation, not a salary deduction or another slab. Check the exact section and official computation for the year before making a payroll decision. Do not assume that the same rebate exists in the other regime.

Build from taxable income carefully

Begin with salary, taxable allowances, perquisites, and other income that belong in the relevant computation, then subtract only deductions and exemptions allowed by the chosen regime. Do not subtract a rent payment, investment, or employer contribution merely because it appears in a package statement. Keep Form 16, payslips, bank interest records, and supporting documents for each field. The official return schedule controls the final classification. If you have capital gains, business income, non-resident status, or special-rate receipts, this simple slab explanation is incomplete and should not be forced to fit your case.

Illustrative scenario: threshold does not change all income

Illustrative scenario: a resident employee's taxable income moves from one band into the next after a variable payment. The employee calculates the lower-band portions first, then applies the next marginal rate only to the additional slice. They check whether the rebate threshold still applies, review any marginal-relief calculation in the official schedule, and keep the tax year on the worksheet. They do not conclude that the entire income is suddenly taxed at the new marginal percentage. This example illustrates progressive arithmetic without predicting a specific person's final liability.

Reconcile tax with payroll

Payroll withholding is an estimate collected during the year, not proof that the final return has been correctly classified. Compare projected annual salary with the taxable salary reported in Form 16, then include eligible non-salary income and credits where applicable. Ask payroll how it treated a joining bonus, stock benefit, reimbursement, or employer retirement contribution. A difference can reflect timing, valuation, declarations, or a changed law rather than a calculation defect. The Department's official e-filing resources and current Act should be used for filing decisions; this page cannot submit or validate a return.

Check the rebate edge, not only the slab chart

For this assessment year, the official new-regime summary pairs the ₹12 lakh total-income limit with a maximum rebate of ₹60,000, subject to eligibility and the special-rate exclusion. A person just above the limit should review marginal relief using the applicable return computation rather than assume the entire rebate disappears in a simple step. Keep tax on ordinary slabs separate from tax on capital gains or other special-rate income. Compare the computed liability before and after relief and note the source version, because a later Finance Act can change both the threshold and the way the relief is calculated.

Record assumptions that affect eligibility

Write the taxpayer's residential status, age category, income heads, assessment year, selected regime, and any special-rate receipt beside the estimate. These are not decorative labels: each can change which table or relief applies. A salary-only projection should state that it excludes interest, dividends, capital gains, and prior-employer income if those figures are not entered. Keep a separate line for tax already withheld so the remaining balance is not mistaken for the year's total liability. When the official portal offers a calculator for the same assessment year, compare its inputs with your worksheet rather than copying only the final amount.

Questions to check

Does crossing one band tax all income at that rate?

No. Slab rates apply progressively to the portion of taxable income in each band.

Can I reuse this table next year?

Only after checking the official rates and rules for the new assessment year.

Official sources

• Income Tax Department: Tax Rates
• Income Tax Department: Highlights to Finance Act 2025