Income Tax Slabs in India for FY 2026-27, Explained
A plain-English walkthrough of the current income tax slabs under both regimes, and how to work out roughly where you land.
EDTechToolsCenter EditorialIndia runs two parallel income tax systems — the new (default) regime and the old regime — and which one saves you more depends entirely on how many deductions and exemptions you claim. Here's how the slabs work and how to think about the choice.
How slab-based tax works
Income tax in India is progressive and slab-based: you don't pay one flat rate on your entire income. Instead, each portion of your income that falls into a slab is taxed at that slab's rate — so moving into a higher slab only raises the rate on the income above that threshold, not your whole salary.
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New regime vs old regime, at a glance
- New regime (default): lower slab rates, but most deductions and exemptions (like 80C, HRA, and most others) aren't available.
- Old regime: higher slab rates, but you can claim deductions — 80C investments, HRA, home loan interest, and more — which can bring your effective tax down significantly if you have enough eligible deductions.
- You can choose either regime each year (for salaried individuals) when filing, so it's worth comparing both.
How to figure out which is better for you
- List out your eligible deductions under the old regime — 80C (PF, ELSS, life insurance), HRA if you pay rent, home loan interest, and any others that apply.
- If your deductions add up to a large portion of your income, the old regime often works out cheaper despite the higher slab rates.
- If you have few or no deductions to claim, the new regime's lower rates usually win.
- Run both scenarios through an income tax calculator with your actual numbers — the difference isn't always obvious just from the slab rates.
Common mistakes
- Assuming the new regime is always better because the rates look lower — it depends entirely on how many deductions you'd otherwise claim.
- Forgetting that the choice of regime can usually be changed each year for salaried taxpayers, so it's worth re-checking annually rather than sticking with one forever.
- Not accounting for employer-side benefits like HRA when comparing regimes.
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Frequently asked questions
The new regime is the default — you're placed in it automatically unless you actively opt for the old regime when filing.
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