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Tax-year changes, India

India tax changes for 2026-27

A new Income-tax Act took effect on 1 April 2026, but the slabs, the rebate and the standard deduction set by Budget 2025 carry on unchanged. Here is each rule under both regimes, side by side.

Reviewed by CentExactRules effective 2 sources

A new Act, the same rates

The Income-tax Act, 2025 replaced the Act of 1961 on 1 April 2026, and with it the old pairing of a "previous year" and an "assessment year" gave way to a single tax year: 2026-27 is the first. The Income Tax Department describes the change as a rewrite that leaves the underlying tax policy alone, and the rates bear that out. Every slab, the rebate, the surcharge steps and the cess are the same in 2026-27 as in 2025-26, so the impact table shows no change at any salary under either regime.

The year that moved payslips was 2025-26. Budget 2025 widened the new regime's slabs, so the nil slab now runs to ₹4,00,000 and each slab after it is 4 lakh rupees wide, and raised the section 87A rebate to ₹60,000 for taxable income up to ₹12,00,000. With the ₹75,000 standard deduction on top, a salary of up to about 12.75 lakh rupees still pays no income tax under the new regime in 2026-27.

The old regime is still there

You can still choose the old regime, with its ₹50,000 standard deduction, a nil slab to ₹2,50,000, a rebate of up to ₹12,500 and deductions such as section 80C, capped at ₹1,50,000. With no deductions to claim it costs more at every salary in the impact table, and the gap grows as salaries rise. It only pays when your deductions are large enough to close that gap.

EPF and cess

EPF contributions are still 12% of basic pay from you and 12% from your employer, and the cess is still 4% of the tax. To compare the two regimes on your own salary and deductions, use the take-home pay calculator.

Every rule, 2025-26 and 2026-27

None of the 50 rules below differs between the two years. Each value is read from the 2025-26 and 2026-27 datasets, so a rule appears as changed only if the published figure changed.

Income tax, new regime

Income tax, new regime: 2025-26 and 2026-27
Rule2025-262026-27Change

Income tax, old regime

Income tax, old regime: 2025-26 and 2026-27
Rule2025-262026-27Change

Surcharge and cess

Surcharge and cess: 2025-26 and 2026-27
Rule2025-262026-27Change
Surcharge step 1: income above₹50,00,000₹50,00,000No change
Surcharge step 1: rate10%10%No change
Surcharge step 2: income above₹1,00,00,000₹1,00,00,000No change
Surcharge step 2: rate15%15%No change
Surcharge step 3: income above₹2,00,00,000₹2,00,00,000No change
Surcharge step 3: rate25%25%No change
Surcharge step 4: income above₹5,00,00,000₹5,00,00,000No change
Surcharge step 4: rate37%37%No change
Health and education cess4%4%No change
Tax rounded to the nearest₹10₹10No change

EPF

EPF: 2025-26 and 2026-27
Rule2025-262026-27Change
Employee EPF contribution12%12%No change
Employer EPF contribution12%12%No change
Statutory wage ceiling a year₹1,80,000₹1,80,000No change
Basic pay assumed, % of salary5050No change

Old regime

Old regime: 2025-26 and 2026-27
Rule2025-262026-27Change
Section 80C deduction limit₹1,50,000₹1,50,000No change
Section 80D health insurance limit₹25,000₹25,000No change
Home loan interest limit₹2,00,000₹2,00,000No change

Professional tax

Professional tax: 2025-26 and 2026-27
Rule2025-262026-27Change
States with no professional tax₹0₹0No change
Professional tax, MH₹2,500₹2,500No change
Professional tax, KA₹2,500₹2,500No change

Take-home pay under both years' rules

Annual take-home pay at each salary, worked out by the take-home pay calculator's own engine under the 2025-26 rules and the 2026-27 rules, with the calculator's opening assumptions for everything else.

New regime

Take-home pay, New regime, 2025-26 and 2026-27
Salary2025-26 take-home2026-27 take-homeChange a year
₹6,00,000₹5,64,000.00₹5,64,000.00No change
₹9,00,000₹8,46,000.00₹8,46,000.00No change
₹12,00,000₹11,28,000.00₹11,28,000.00No change
₹15,00,000₹13,12,500.00₹13,12,500.00No change
₹18,00,000₹15,41,200.00₹15,41,200.00No change
₹24,00,000₹19,63,500.00₹19,63,500.00No change
₹36,00,000₹27,21,000.00₹27,21,000.00No change
₹60,00,000₹40,87,020.00₹40,87,020.00No change

Old regime, with no deductions claimed

Take-home pay, Old regime, with no deductions claimed, 2025-26 and 2026-27
Salary2025-26 take-home2026-27 take-homeChange a year
₹6,00,000₹5,49,440.00₹5,49,440.00No change
₹9,00,000₹7,71,430.00₹7,71,430.00No change
₹12,00,000₹9,86,660.00₹9,86,660.00No change
₹15,00,000₹11,80,680.00₹11,80,680.00No change
₹18,00,000₹13,74,700.00₹13,74,700.00No change
₹24,00,000₹17,62,730.00₹17,62,730.00No change
₹36,00,000₹25,18,200.00₹25,18,200.00No change
₹60,00,000₹38,63,940.00₹38,63,940.00No change

Work out your own figure: take-home pay on 2026-27 rules or on 2025-26 rules.

Data sources

Both years' rules are read from datasets that record where each figure came from and when it applies. 2026-27 took effect on 1 April 2026.

  1. India: income tax under the new and old regimes, EPF and professional tax, FY 2026-27

    Income Tax Department, tax rates; Income Tax Department, official tax calculator; EPFO, contribution rates.

    Effective 1 April 2026 to 31 March 2027. Retrieved 29 August 2026. Within its effective period.

    Financial year 2026-27 (assessment year 2027-28). The Union Budget 2026 left the slabs, cess, surcharge and the section 87A rebate unchanged from the Budget 2025 settings, so the same rates also apply to FY 2025-26. Salary is assumed to be the annual gross rather than CTC, which additionally contains the employer's own contributions. HRA exemption, perquisite valuation, employer contributions above the taxable threshold, and the ESI contribution-period continuation rule are not modelled. Professional tax is modelled only for the states whose Acts were verified; other states are treated as nil and say so.

    How we checked these figures

    Slabs, rebate, surcharge and cess are the published statutory figures. Vectors are computed from them and should be re-checked against the department's own calculator, which is linked above.

  2. India: income tax under the new and old regimes, EPF and professional tax, FY 2025-26

    Income Tax Department, tax rates; Finance Act, 2025 (No. 7 of 2025), Gazette of India; EPFO, contribution rates.

    Effective 1 April 2025 to 31 March 2026. Retrieved 19 October 2026. Past its effective period.

    Financial year 2025-26 (assessment year 2026-27), the first year of the Budget 2025 slabs: nil to 4 lakh rupees under the new regime, a section 87A rebate of up to 60,000 rupees that clears tax on income to 12 lakh, and a 75,000 rupee standard deduction. The old regime's slabs and rebate are unchanged from earlier years. Salary is assumed to be the annual gross rather than CTC. HRA exemption, perquisite valuation and the ESI continuation rule are not modelled, and professional tax only for the states whose Acts were verified.

    How we checked these figures

    Slabs, rebate, surcharge and cess as enacted by the Finance Act, 2025 and published by the Income Tax Department for assessment year 2026-27.