What Changed in FY 2026-27?
The Union Budget for FY 2026-27 continues the government's push toward the new tax regime as the default option. Key highlights:
- Standard Deduction increased to ₹75,000 under the new regime (up from ₹50,000 earlier).
- Rebate under Section 87A ensures income up to ₹12 lakh is effectively tax-free under the new regime.
- Revised tax slabs with lower rates across income brackets in the new regime.
- Old regime remains unchanged with the basic exemption of ₹2,50,000.
New Regime Tax Slabs FY 2026-27
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Old Regime Tax Slabs FY 2026-27
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard Deduction: ₹75,000 (new regime) | ₹50,000 (old regime)
Rebate u/s 87A (New Regime): Income up to ₹12 lakh is effectively tax-free.
Rebate u/s 87A (New Regime): Income up to ₹12 lakh is effectively tax-free.
Key Deductions & Exemptions (Old Regime)
- Section 80C: Up to ₹1,50,000 (PPF, ELSS, EPF, life insurance, etc.)
- Section 80D: Health insurance premium up to ₹25,000 (₹50,000 for senior citizens)
- HRA Exemption: Based on salary, rent paid, and city of residence
- Home Loan Interest (Section 24): Up to ₹2,00,000 for self-occupied property
- NPS (Section 80CCD(1B)): Additional ₹50,000 deduction
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