Income Tax slabs FY 2026-27: Will rates change from April 1 under new tax rules? Details here

As the new financial year begins on April 1, 2026, taxpayers expecting a revision in income tax slabs may be in for a surprise. The government has retained the existing slab structure under both the old and new tax regimes for FY 2026-27 (AY 2027-28), continuing the framework from the previous year.

However, while slab rates remain unchanged, rebates, deductions and exemptions continue to play a decisive role in determining actual tax liability.

Old vs new regime: Same slabs, different outcomes

The old tax regime continues with its traditional structure, allowing taxpayers to reduce taxable income through a wide range of deductions and exemptions.

Income Slab (₹)	Tax Rate
Up to ₹2.5 lakh	Nil
₹2.5 lakh - ₹5 lakh	5%
₹5 lakh - ₹10 lakh	20%
Above ₹10 lakh	30%

Under this regime, individuals can claim a standard deduction of ₹50,000. In addition, taxpayers with income up to ₹5 lakh are eligible for a rebate under Section 87A, effectively bringing their tax liability down to zero. Higher basic exemption limits of ₹3 lakh and ₹5 lakh apply for senior and super senior citizens, respectively.

The key advantage of the old regime lies in the availability of deductions such as Section 80C investments, health insurance under 80D, HRA, LTA and home loan benefits, making it suitable for those with structured tax-saving investments.

In contrast, the new tax regime under Section 115BAC offers lower tax rates with minimal exemptions, focusing on simplicity.

Income Slab	Tax Rate
Up to ₹12 lakh	Nil (after rebate)
₹12 lakh - ₹16 lakh	15%
₹16 lakh - ₹20 lakh	20%
₹20 lakh - ₹24 lakh	25%
Above ₹24 lakh	30%

A major highlight of the new regime is the rebate under Section 87A, which can go up to ₹60,000, ensuring that individuals with taxable income up to ₹12 lakh have zero tax liability. For salaried individuals, the benefit can extend further due to the standard deduction of ₹75,000.

While the regime offers this higher rebate and lower rates, it does not allow the most common exemptions, such as HRA, Section 80C or 80D deductions. Additionally, the surcharge for high-income earners remains capped at 25%.

Deductions and exemptions: The deciding factor

The choice between the two regimes ultimately depends on how much a taxpayer can claim in deductions.

Under the old regime, taxpayers can avail multiple benefits, including investments under Section 80C (PF, LIC, ELSS), medical insurance under 80D, house rent allowance (HRA), leave travel allowance (LTA), home loan interest and education loan interest deductions.

In contrast, the new regime largely removes these exemptions, retaining only limited benefits such as the standard deduction and certain employer contributions.