Nil-rate slab
The first ₹4 lakh of income falls in the nil slab under the new regime.
New tax regime · Updated 23 September 2026
Up to ₹12 lakh income tax is zero. Here is how the rebate works.
For an eligible resident individual with normal slab-rate income, Section 87A reduces the calculated tax to zero. Understand the current slabs, ₹60,000 rebate, standard deduction and important exceptions.
Zero final tax
For an eligible resident individual, the ₹60,000 rebate reduces the slab tax to zero.
Salaried illustration
The ₹75,000 standard deduction can make gross salary up to ₹12.75 lakh tax-free in a straightforward eligible case.
Tax calculated from slabs₹60,000
−Section 87A rebate₹60,000
=Final income tax₹0
Clear answer: eligible normal slab-rate income up to ₹12 lakh has zero final tax. Special-rate income—including certain capital gains—and non-resident status can change the result.
Tax Year 2026-27
New tax regime slab rates.
Budget 2026 did not introduce a fresh change to these personal slab rates.
| Total income slab | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Also applicable: Health and Education Cess and surcharge may apply separately. Marginal relief can be relevant around the rebate threshold and at applicable surcharge thresholds. This table alone is not a complete tax computation.
Rebate versus slab
Why ₹12 lakh can still mean zero tax.
Slabs calculate tax first
Income above ₹4 lakh is still covered by progressive slab rates. The slab does not become nil all the way to ₹12 lakh.
Rebate may reduce it
An eligible resident individual with total income up to ₹12 lakh may claim a rebate up to ₹60,000 under the new regime.
Special-rate income matters
The headline relief does not automatically cover income taxed at special rates, such as certain capital gains.
Marginal relief can apply
Income slightly above ₹12 lakh may qualify for marginal relief, subject to the applicable rules and calculation.
What you may claim
Lower rates come with fewer deductions.
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₹75,000 standard deduction
Available for eligible salaried taxpayers and pensioners under the new regime.
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Employer NPS contribution
Employer contribution to an eligible NPS account may qualify, subject to the statutory limit and conditions.
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Specified exceptions
Certain limited deductions—such as eligible Agniveer Corpus Fund contributions—may remain available.
Old versus new
The better regime depends on your facts—not a headline.
List income by type
Separate salary, house property, business income, interest, dividends and capital gains before comparing regimes.
Map real deductions
Use deductions you can actually document—not investments made only to win a tax comparison.
Compute both regimes
Include slab tax, rebate, surcharge, cess and special-rate income. Use the official calculator or a qualified tax professional.
Check switching rules
Taxpayers without business income generally have more flexibility. Business or professional income can involve stricter opt-out and re-entry rules.
A new law, familiar rates
From 1 April 2026, “Tax Year” replaces the old two-year language.
The Income-tax Act, 2025 applies to income earned from 1 April 2026. The period April 2026 to March 2027 is described as Tax Year 2026-27. Earlier income—such as FY 2025-26 / AY 2026-27—continues under the Income-tax Act, 1961.
Budget 2026 retained the personal slab rates, while the new Act simplified language, structure and section numbering. When reading older articles, always check which year and which Act they refer to.
Frequently asked
New tax regime questions, answered carefully.
Yes, the new regime is the default for eligible taxpayers. A taxpayer may opt for the old regime where permitted, but business or professional income can involve additional conditions and switching restrictions.
Yes. For an eligible resident individual with normal slab-rate total income up to ₹12 lakh, the Section 87A rebate of up to ₹60,000 reduces the calculated tax to zero. Special-rate income requires separate review.
The ₹75,000 standard deduction can reduce a ₹12.75 lakh salary to ₹12 lakh of taxable income in a straightforward eligible case. Other income or adjustments may change the outcome.
No. Arvitha can help organise investment information and coordinate a tax-aware investment review. Tax computations, legal interpretation and return filing should be handled by a qualified chartered accountant or tax professional.
Official referencesIncome Tax Department: salaried individuals and tax slabs ↗Income Tax Department: AY 2026-27 rebate FAQ ↗Income Tax Department: Income-tax Act, 2025 transition ↗Official income and tax calculator ↗
Important: This page is general investor education, not tax or legal advice. Tax outcomes depend on residential status, income type, deductions, special-rate income and the law applicable to the relevant year. Verify the latest official rules and consult a qualified tax professional before filing or acting.