India Personal Tax Guide 2026
India offers two income tax regimes. The new regime (default from FY 2023-24) has lower rates but no deductions/exemptions. The old regime has higher rates but allows deductions under Section 80C (₹1.5L), 80D (health insurance), HRA exemption, and home loan interest. For FY 2026-27, the new regime tax slabs are: 0% up to ₹4L, 5% (₹4-8L), 10% (₹8-12L), 15% (₹12-16L), 20% (₹16-20L), 25% (₹20-24L), and 30% above ₹24L. A standard deduction of ₹75,000 is available in the new regime for salaried employees. A rebate under Section 87A applies to income up to ₹7L in the new regime (tax payable = ₹0). The health and education cess (4%) is added to the tax amount.
New Tax Regime Slabs — FY 2026-27
The new regime is the default. Most taxpayers should compare both regimes to choose the lower option.
| Annual Income (₹) | Rate |
|---|---|
| 0 – 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% |
| 24,00,001+ | 30% |
A standard deduction of ₹75,000 applies to salaried employees in the new regime. Section 87A provides a full rebate (tax = ₹0) for income up to ₹7,00,000 in the new regime. Cess of 4% is added to the total tax. Surcharge applies at higher incomes: 10% for income ₹50L-1Cr, 15% for ₹1Cr-2Cr, 25% for ₹2Cr-5Cr, and 37% above ₹5Cr.
Worked Example — ₹12,00,000 Salary (New Regime)
| Gross salary | ₹12,00,000 |
| Standard deduction | −₹75,000 |
| Taxable income | ₹11,25,000 |
| 0% on first ₹4,00,000 | ₹0 |
| 5% on ₹4,00,001–₹8,00,000 | ₹20,000 |
| 10% on ₹8,00,001–₹11,25,000 | ₹32,500 |
| Tax before cess | ₹52,500 |
| Health & education cess (4%) | ₹2,100 |
| Total tax payable | ₹54,600 |
Effective tax rate: 4.6% (of gross salary). Take-home: ~₹11,45,400 before other deductions like PF. Under the old regime with full 80C deductions, the tax would be roughly ₹66,560 — the new regime is more beneficial at this income level (saving ~₹12,000).
Old Tax Regime (Optional)
Taxpayers can opt for the old regime if their total deductions (80C, 80D, HRA, home loan, etc.) exceed the tax savings from the lower new-regime rates. The old regime slabs (FY 2026-27) are:
| Annual Income (₹) | Rate |
|---|---|
| 0 – 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| 10,00,001+ | 30% |
The old regime is more beneficial if you claim ₹1.5L in Section 80C investments (PPF, ELSS, life insurance, tuition fees, etc.) plus additional deductions like ₹25,000-50,000 in 80D (health insurance), HRA exemption (if renting), and home loan interest up to ₹2L under Section 24(b). The old regime requires maintaining proper records of investments and expenses. You can switch between regimes year-to-year if you have no business income.
Key Deductions (Old Regime)
- Section 80C: Up to ₹1,50,000. Covers PPF, EPF, ELSS mutual funds, life insurance premiums, tuition fees for children (up to 2), principal repayment on home loan, NSC, tax-saving FDs (5-year lock-in), and Sukanya Samriddhi scheme.
- Section 80D: Health insurance premiums. ₹25,000 (₹50,000 for seniors) for self/family/spouse. Plus ₹25,000 for parents (₹50,000 if senior).
- Section 24(b): Home loan interest up to ₹2,00,000 on self-occupied property (no upper limit on let-out property).
- HRA exemption: Least of: actual HRA received, 50% of salary (metro) or 40% (non-metro), or rent paid minus 10% of salary. Requires rent receipts.
- Section 80E: Interest paid on education loans — full deduction for up to 8 years (no upper limit).
- Standard deduction: ₹50,000 for salaried employees (₹75,000 in new regime).
Filing Requirements
- ITR forms: Choose the correct form based on income type: ITR-1 (salary, one house property), ITR-2 (capital gains, foreign assets), ITR-3 (business/profession), ITR-4 (presumptive income under 44AD/44ADA).
- Deadline: July 31, 2026 (for FY 2025-26). Belated return can be filed by December 31, 2026 with a late fee of ₹5,000 (₹1,000 if income under ₹5L).
- TDS/TCS: Tax is deducted at source by employers (TDS on salary) and other payers. TDS appears in Form 26AS and AIS (Annual Information Statement).
- e-Filing: File through the Income Tax Portal (incometax.gov.in). Most salaried employees can file ITR-1 using the simplified online form or third-party tools like ClearTax.
- Aadhaar-PAN linking: Mandatory for filing. If not linked, file by the deadline to avoid the PAN becoming inoperative.