India
India: old vs new tax regime in FY 2026-27
6 min read · Last updated 1 November 2026 · Tax Globy editorial team
For FY 2026-27, salaried taxpayers in India still choose between the old and the new tax regime. The slabs and the standard deduction differ, and so does the value of the deductions you can claim. This guide compares both regimes with the verified figures and works through a salary of INR 1,500,000.
Two regimes, one decision
The old regime and the new regime use different slabs, different standard deductions and different rebates. The right choice depends on how much you can deduct, not on which regime sounds simpler.
Budget 2026 left the FY 2025-26 slab structure unchanged for FY 2026-27. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, with renumbered sections but the same substance.
New regime slabs
The new regime has wider bands and a higher standard deduction, but it gives up most itemised deductions. The table shows the annual taxable income bands and the rate applied to each slice.
The regime you choose affects the tax withheld during the year, so confirm which one your payroll has applied before comparing a payslip with an annual estimate.
| Taxable income (INR) | Rate |
|---|---|
| Up to 400,000 | Nil |
| 400,001 to 800,000 | 5% |
| 800,001 to 1,200,000 | 10% |
| 1,200,001 to 1,600,000 | 15% |
| 1,600,001 to 2,000,000 | 20% |
| 2,000,001 to 2,400,000 | 25% |
| Above 2,400,000 | 30% |
Run your own numbers
The calculator applies the rates described in this guide and shows the band-by-band breakdown.
Open the India calculatorOld regime slabs
The old regime keeps three rates and allows deductions such as Section 80C investments, Section 80D health insurance, house rent allowance and home loan interest. The table shows its annual taxable income bands.
Fewer bands mean the old regime reaches 30% sooner. At INR 1,450,000 of taxable income, the income above INR 1,000,000 is taxed at 30%, which is why deductions matter so much under this regime.
| Taxable income (INR) | Rate |
|---|---|
| Up to 250,000 | Nil |
| 250,001 to 500,000 | 5% |
| 500,001 to 1,000,000 | 20% |
| Above 1,000,000 | 30% |
Standard deduction, rebate and cess
The new regime allows a standard deduction of INR 75,000 and the old regime INR 50,000. Under Section 87A, the new regime gives a rebate of up to INR 60,000 where taxable income is up to INR 1,200,000, so a salaried income of INR 1,275,000 can be tax-free after the standard deduction.
The old regime rebate is INR 12,500 where taxable income is up to INR 500,000. A health and education cess of 4% applies to tax plus surcharge under both regimes. Surcharge is capped at 25% in the new regime, while the old regime can reach 37% above INR 50,000,000. The cess is charged on the tax after the rebate, so it applies to the amount actually payable.
Worked example: INR 1,500,000
Assume a salaried taxpayer with gross income of INR 1,500,000, no other income and no deductions beyond the standard deduction. The table compares the two regimes on those assumptions.
The new regime produces a total of INR 97,500 and the old regime INR 257,400. The difference is about INR 160,000, which is the gap that old-regime deductions would need to close before the old regime becomes the cheaper option.
| Item | New regime | Old regime |
|---|---|---|
| Standard deduction | 75,000 | 50,000 |
| Taxable income | 1,425,000 | 1,450,000 |
| Tax before cess | 93,750 | 247,500 |
| Cess at 4% | 3,750 | 9,900 |
| Total tax | 97,500 | 257,400 |
When the old regime can win
At a salary of INR 1,500,000 the break-even is about INR 543,750 of total deductions, including the INR 50,000 standard deduction. Below that the new regime costs less; above it the old regime starts to pull ahead. That is a high bar, which is why most salaried people at this income level stay in the new regime.
The exact break-even depends on your actual deductions: how much you put into 80C, the health insurance premium you claim under 80D, your HRA and any home loan interest. Compute both regimes with your real figures rather than relying on a rule of thumb.
- Section 80C investments
- Section 80D health insurance
- House rent allowance
- Home loan interest
The Income-tax Act, 2025
The new Act applies from 1 April 2026 and replaces the Income-tax Act, 1961. Sections have been renumbered, so a relief you know by an old number may appear under a new one, but the substance of the provisions is unchanged.
When you read official guidance or fill in a form for FY 2026-27, use the current section numbers and check which regime the calculation assumes. A comparison is only meaningful when both sides use the same year and the same income.
Common questions
Which regime is better for a salaried taxpayer?
It depends on your deductions. The new regime usually wins when deductions are small; the old regime can win when 80C, 80D, HRA and home loan interest add up to a large amount.
Is income up to INR 1,275,000 really tax-free in the new regime?
A salaried income of INR 1,275,000 can be tax-free after the INR 75,000 standard deduction leaves taxable income of INR 1,200,000, which qualifies for the Section 87A rebate of up to INR 60,000.
Does the 4% cess apply after the rebate?
The cess is charged on tax plus surcharge, after the rebate. If the rebate reduces the tax to zero, the cess is zero as well.
What changed on 1 April 2026?
The Income-tax Act, 2025 replaced the 1961 Act. Sections are renumbered, but the substance of the provisions did not change.
Written and maintained by the Tax Globy editorial team
Tax Globy is an independent calculator project. Every rate, threshold and deduction is checked against the published official source listed on the page, and each page shows when it was last reviewed.
Last reviewed 1 November 2026 · Estimates only, not tax advice.
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