FY 2026-27 · Income Tax Act 2025 · New Regime is default
You Save
in New Tax Regime
Monthly In-Hand
₹1,00,000
Tax Rate
0%
of your income
FY 2026-27 · IT Act 2025 · Estimates only · Consult your CA
India offers two income tax regimes under the Income Tax Act 2025, effective April 1, 2026. The choice between them can save you lakhs every year.
The New Tax Regime has lower slab rates across 7 brackets (0% to 30%) but strips away most deductions. The Old Tax Regime uses 4 broader slabs with higher rates but unlocks 17+ deductions — including 80C, HRA, 80D, NPS, and home loan interest.
Since FY 2023-24, the New Regime is the default. To use the Old Regime, you must actively inform your employer.
Same for all ages. 7 slabs with progressive rates.
Higher exempt threshold for senior (₹3L) and super senior (₹5L) citizens.
It depends entirely on your deductions. If your combined deductions (80C + HRA + 80D + NPS + home loan) cross a threshold, Old Regime saves more. For most employees earning under ₹12 lakh, the New Regime results in zero tax thanks to the Section 87A rebate.
A tax rebate for resident individuals below a threshold. Under New Regime, taxable income up to ₹12,00,000 qualifies for a rebate of up to ₹60,000 — resulting in zero slab tax. Under Old Regime, the threshold is ₹5,00,000 with a max rebate of ₹12,500.
Important: This rebate does not apply to capital gains (LTCG under 112A, STCG under 111A) or lottery/gaming income. NRIs are not eligible.
Very few deductions survive in the New Regime. The notable ones: standard deduction of ₹75,000 (vs ₹50,000 in Old), Employer NPS 80CCD(2) up to 14% of basic salary — this is the only major deduction in both regimes — and let-out property home loan interest (though loss set-off against salary is not allowed).
An additional tax on high-income earners above ₹50 lakhs. Rates range from 10% to 37% in Old Regime, capped at 25% in New Regime. Capital gains surcharge is always capped at 15%. Marginal relief prevents your total tax from exceeding your extra income above the threshold.
A mandatory 4% charge on your total tax (including surcharge) to fund public healthcare and education. Applies to every taxpayer in both regimes, regardless of income level.
Yes — this is 100% legal and one of the most effective HRA strategies. You claim HRA exemption under Old Regime while your parents declare the rental income in their ITR, often at a lower tax bracket. Requirements: genuine rent agreement, bank transfers (not cash), and landlord PAN if annual rent exceeds ₹1 lakh.
Yes, salaried employees can switch every year. Inform your employer before the start of the financial year. Self-employed individuals can only switch once in their lifetime.
Not always. If your total deductions (HRA + 80C + 80D + home loan) exceed approximately ₹5 lakh, Old Regime may save more. The breakeven depends on your income level. Use this calculator to compare with your actual numbers.
Yes, if your employer deducted TDS and you want a refund. Filing is also mandatory if you have capital gains, foreign income, or income from multiple sources, regardless of the rebate threshold.
July 31, 2027 for most individuals. This covers ITR-1 and ITR-2. Business income (ITR-3, ITR-4) has a deadline of August 31, 2027. If tax audit is required, the deadline is October 31, 2027.
You will pay a late filing penalty of ₹5,000 under Section 234F. If your income is below ₹5 lakh, the penalty is reduced to ₹1,000. You also lose the ability to carry forward capital losses to future years.
No, Section 87A rebate is only for resident individuals. Non-residents cannot claim this benefit under either the Old or New tax regime.
Form 130 is the TDS certificate your employer issues. It was introduced under the new Income Tax Act 2025 and replaces the old Form 16. It contains your salary details, deductions claimed, and tax deducted at source. You need it for filing your ITR.
If your total deductions are modest, the New Regime with its lower slab rates is usually the better choice.
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