Confused Between Tax Regimes?
Before you file, understand which regime actually saves you more. Read Old vs New Tax Regime: Which One Actually Saves You More? for a full breakdown.
Income Tax in India — New vs Old Regime Explained
India has two income tax regimes as of FY 2026-27: the New Tax Regime (default) with lower slab rates but fewer deductions, and the Old Tax Regime with higher rates but comprehensive deductions. Choosing the right one can save you lakhs.
Union Budget 2026 — What Changed (and What Didn't)
- No change to slab rates or the New Regime structure — the rates introduced in Budget 2025 for FY 2025-26 carry forward unchanged into FY 2026-27.
- The Income Tax Act, 2025 formally came into effect from 1st April 2026, replacing the six-decade-old Income Tax Act, 1961 — this simplifies the law's structure and language but doesn't change how much tax you pay.
- Zero tax up to ₹12 lakh income continues under the New Regime (after rebate u/s 87A).
- Standard deduction remains ₹75,000 under the New Regime.
- Surcharge remains capped at 25% for all income levels under the New Regime.
- Securities Transaction Tax (STT) on Futures & Options was hiked — relevant if you trade F&O, not directly part of salary tax slabs.
New Tax Regime Slabs — FY 2026-27 (unchanged from FY 2025-26)
| Income Range | Tax Rate (New Regime) |
|---|---|
| Up to ₹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% |
| Above ₹24,00,000 | 30% |
How to Use This Calculator
- Enter your annual salary/CTC and any other income sources.
- Switch between New and Old regime using the toggle at the top.
- For Old Regime: enter your eligible deductions (80C, 80D, NPS, etc.).
- The calculator instantly shows your total tax, effective rate, and breakdown.
- Compare both regimes to decide which saves you more tax.
How Tax is Calculated
- Gross Income = Salary + Other Income + Interest + Rental Income
- Net Taxable Income = Gross Income – Standard Deduction – Eligible Deductions
- Base Tax is computed as per the applicable slab rates.
- Surcharge is added if income exceeds ₹50 lakh.
- Health & Education Cess of 4% is added on (Base Tax + Surcharge).
- Total Tax Payable = Base Tax + Surcharge + Cess
Example: Salary of ₹18 Lakh — New Regime
Here's how tax is calculated for a salaried individual with ₹18 lakh CTC under the New Tax Regime for FY 2026-27:
Gross Salary₹18,00,000
Standard Deduction– ₹75,000
Net Taxable Income₹17,25,000
Tax Breakdown
₹0 – ₹4L (0%)₹0
₹4L – ₹8L (5%)₹20,000
₹8L – ₹12L (10%)₹40,000
₹12L – ₹16L (15%)₹60,000
₹16L – ₹17.25L (20%)₹25,000
Cess @ 4% ₹5,800
Total Tax ₹1,50,800
New Regime vs Old Regime — When to Choose What
- Choose New Regime: if your deductions are less than ₹3.75 lakh — the new regime will save you more tax.
- Choose Old Regime: if you have high 80C investments, HRA, home loan interest, and NPS contributions totalling ₹3.75L+.
- Salaried employees: can switch regime every year at the time of filing ITR.
- Business owners: can switch only once from Old to New Regime.
- Senior Citizens: Old Regime may be better due to higher exemption limit (₹3L for 60+, ₹5L for 80+).
- Zero Tax up to ₹12L: New Regime offers full rebate u/s 87A for income up to ₹12 lakh.
Common Mistakes to Avoid
- 1. Assuming HRA and 80C deductions apply under the New RegimeMost exemptions and deductions — HRA, 80C, home loan interest on self-occupied property, and more — are not available under the New Regime. If you're a high-rent, high-80C taxpayer, run the numbers under the Old Regime before assuming the New Regime's lower rates are automatically better.
- 2. Thinking a small overshoot past ₹12 lakh wipes out the entire rebateMarginal relief under Section 87A ensures your extra tax never exceeds the amount by which your income crosses ₹12 lakh. Earning ₹12.1 lakh doesn't suddenly mean tax on the full ₹12.1 lakh — many people overestimate this cliff and make poor last-minute income-timing decisions because of it.
- 3. Assuming business income can switch regimes every year like salary incomeSalaried individuals can freely switch between Old and New Regime each year while filing ITR. But if you have business or professional income, you can switch from Old to New only once — after that, switching back to Old is restricted. Factor this in before opting for New Regime as a business owner.
Final Thoughts
Budget 2026 kept slab rates unchanged from FY 2025-26, so the New Regime's ₹12 lakh zero-tax threshold and ₹75,000 standard deduction continue into FY 2026-27. The real decision is still Old vs New based on your deductions, not chasing rate changes — use this calculator to compare both regimes against your actual numbers rather than assuming one is universally better.