Understanding income tax slab rates as per Budget 2026 for AY 2027-28 is critical for every taxpayer in India — whether you are a salaried employee, a business owner, a professional, or an investor. In this detailed blog, we will walk you through every aspect of these tax slab rates, what has changed (or not changed) in the Budget 2026, how the new and old tax regimes compare, real examples, and common FAQs to help you plan your taxes better.
By the end of this guide, you will clearly know:
✅ What the income tax slab rates as per Budget 2026 for AY 2027-28 are
✅ How the new and old tax regimes differ
✅ How rebates, deductions, and cess affect your tax
✅ Practical examples and calculation tips
✅ Answers to frequently asked questions
What Are Income Tax Slab Rates?
Income tax slabs determine how much tax you pay on your annual taxable income. In India, the government uses a progressive tax system, meaning the more you earn, the higher the rate you pay on your additional income.
For the Assessment Year (AY) 2027-28, which corresponds to the Financial Year (FY) 2026-27, the government presented the Budget 2026 on February 1, 2026. The most important outcome for taxpayers was that there were no major changes in the income tax slab rates — they remain largely the same as they were in the previous year.
This continuity gives taxpayers stability and predictability in planning their finances.
Understanding Assessment Year 2027-28
Before diving into slab rates, it is important to understand the difference between:
Financial Year (FY) 2026-27 – The year in which income is earned.
Assessment Year (AY) 2027-28 – The year in which income earned in FY 2026-27 is assessed and taxed.
So when we discuss the income tax slab rates as per Budget 2026 for AY 2027-28, we are referring to tax on income earned between 1 April 2026 and 31 March 2027.
Overview of Budget 2026 Tax Announcements
The Government of India presented Budget 2026 with a focus on economic stability, infrastructure growth, and middle-class relief. However, regarding personal taxation, there were no drastic structural changes. The slab rates largely remain similar to the previous financial year, offering continuity and predictability.
This means taxpayers reviewing the income tax slab rates as per Budget 2026 for AY 2027-28 can plan their investments without worrying about sudden tax increases.
Income Tax Slab Rates
📈 tax rate
| Income slab (₹) | Rate |
|---|---|
| Up to ₹4,00,000 | Nil (0%) |
| ₹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% |
* New tax regime (default from FY 2026-27). No rebate u/s 87a is considered in this slab view.
Highlights of These Rates
✔ 0% tax up to ₹4 lakh
✔ Gradually increasing tax rates up to 30% for incomes above ₹24 lakh
✔ No separate slab for senior citizens in the new regime
✔ Simple structure with minimal exemptions and deductions
Income Tax Slab Rates
📌 For people who prefer traditional allowances & deductions (80C, HRA, LTA, etc.) – the old tax regime continues unchanged, with age-based slabs.
🔹 below 60 · senior · super seniorBelow 60 years
< 60| 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% |
Senior citizens
60 to <80 yrs| Income slab (₹) | Tax rate |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Super senior
80 years & above| Income slab (₹) | Tax rate |
|---|---|
| Up to 5,00,000 | Nil |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
⚖️ Income Tax slab rates as per Budget 2026 · AY 2027-28 — Old Tax Regime (age-based). super senior: above 10L @30%
Rebate Under Section 87A
Rebate reduces your tax liability if income is below a certain threshold.
Under the new regime: Rebate available for income up to ₹7 lakh (subject to conditions).
Under old regime: Rebate available up to ₹5 lakh income.
This effectively makes tax zero for eligible individuals.
Health and Education Cess
After calculating tax as per slab rates, an additional:
4% Health & Education Cess is added.
This applies under both regimes.
Example Calculation (New Regime)
Let’s assume taxable income = ₹12,00,000.
Tax calculation:
0–4,00,000 = Nil
4–8 lakh = 5% of 4 lakh = ₹20,000
8–12 lakh = 10% of 4 lakh = ₹40,000
Total Tax = ₹60,000
Add 4% cess = ₹2,400
Total Tax Payable = ₹62,400
This is how the income tax slab rates as per Budget 2026 for AY 2027-28 apply in practice.
Old vs New Regime – Which is Better?
Choosing between regimes depends on your deductions.
Choose New Regime if:
You do not invest much in 80C.
You prefer simplicity.
Your salary structure has fewer exemptions.
Choose Old Regime if:
You claim HRA.
You invest ₹1.5 lakh under 80C.
You pay health insurance (80D).
You claim home loan interest.
Before filing, carefully analyze the income tax slab rates as per Budget 2026 for AY 2027-28 to maximize savings.
Important Deductions (Old Regime Only)
Section 80C (₹1.5 lakh)
Section 80D (Medical Insurance)
Home Loan Interest (Section 24)
HRA exemption
LTA exemption
These deductions are not available in the new regime (except standard deduction).
Why Budget 2026 Slabs Matter for You
Understanding the income tax slab rates as per Budget 2026 for AY 2027-28 helps you:
Plan investments
Optimize salary structure
Estimate advance tax
Avoid penalties
File accurate ITR
Whether you are a government employee, private employee, teacher, or small business owner, proper tax planning ensures better financial management.
Frequently Asked Questions (FAQ)
1. What are the latest income tax slab rates for AY 2027-28?
The slab rates remain similar to the previous year under both old and new regimes. The new regime offers 0% up to ₹4 lakh and maximum 30% above ₹24 lakh.
2. Has Budget 2026 increased income tax rates?
No major increase has been announced in slab rates.
3. Is the new tax regime compulsory?
No. It is the default regime, but taxpayers can choose the old regime while filing returns.
4. What is the standard deduction for AY 2027-28?
₹75,000 under the new regime and ₹50,000 under the old regime for salaried employees and pensioners.
5. Which regime is better for salaried employees?
It depends on deductions. If you claim high deductions, old regime may be better. Otherwise, new regime offers lower rates.
6. Do senior citizens get special benefits?
Yes, under the old regime they have higher basic exemption limits.
7. Is 4% cess applicable on all taxpayers?
Yes, Health & Education Cess of 4% applies to everyone.
Final Conclusion
The income tax slab rates as per Budget 2026 for AY 2027-28 provide stability and clarity for taxpayers. While no dramatic changes were introduced, the structured slabs under the new regime continue to simplify taxation for many individuals.
Before filing your Income Tax Return for AY 2027-28, carefully compare both regimes. Calculate your deductions, check rebate eligibility, and include cess and surcharge where applicable.
Proper understanding of the income tax slab rates as per Budget 2026 for AY 2027-28 ensures that you do not overpay taxes and can legally minimize your liability.
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