In the Union Budget 2026-27 presented by Finance Minister Nirmala Sitharaman on February 1, 2026, there are no changes to the income tax slab rates for individuals.
The government chose to maintain the revised structure introduced in the previous year (Budget 2025), which significantly benefited middle-income earners. The New Tax Regime remains the default choice for taxpayers.
Income Tax Slab Rates 2026-27 for the Tax Year 2026-27
The Income Tax Slabs and rates under the New Regime for the Tax Year 2026-27:
| Income Slab (₹) | Tax 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% |
| Above 24,00,000 | 30% |
Key Highlights for Individual Taxpayers
- Zero Tax Limit: Individuals with an annual income up to ₹12 lakh pay zero tax under the new regime due to the Section 87A rebate (up to ₹60,000).
- Salaried Benefit: For salaried employees, the effective tax-free limit is ₹12.75 lakh, factoring in the standard deduction of ₹75,000.
Based on the Union Budget 2026-27, there are no changes to the income tax slab rates under the Old Tax Regime as well, for the Tax Year 2026-27. Here are the applicable slab rates for the Old Tax Regime for Tax Year 2026-27:
1. Individuals (Below 60 years of age) & HUF
| Income Slab (₹) | Tax Rate (%) |
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Note on Rebate: Individuals with a net taxable income up to ₹5 lakh get a full tax rebate under Section 87A, meaning they pay zero tax. (Contrast this with the ₹7 lakh limit in the New Regime).
2. Senior Citizens (60 years to less than 80 years)
| Income Slab (₹) | Tax Rate (%) |
| Up to 3,00,000 | Nil |
| 3,00,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
3. Super Senior Citizens (80 years and above)
| Income Slab (₹) | Tax Rate (%) |
| Up to 5,00,000 | Nil |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Important Reminders for the Old Regime
- Not the Default: The New Tax Regime is the default setting. If you want to use the Old Tax Regime rates mentioned above, you must explicitly opt-in while filing your Income Tax Return (ITR).
- Deductions Available: The primary reason taxpayers still choose this regime is to avail of deductions and exemptions that are disallowed in the New Regime, such as:
- Section 80C (up to ₹1.5 lakh for PPF, ELSS, LIC, etc.)
- Section 80D (Health Insurance premiums)
- HRA (House Rent Allowance) exemption
- LTA (Leave Travel Allowance) exemption
- Interest on Home Loan (Section 24b) for self-occupied property.
- Cess & Surcharge: Health and Education Cess @ 4% is applicable on the total income tax liability in all cases. Surcharges apply for incomes above ₹50 lakh at varying rates.
Budget 2026 & Key Personal Finance Highlights
Here are the key updates related to personal finance and income tax as presented in the Union Budget 2026.
- One “Tax Year” system: From 1 April 2026, the government is removing the confusion of Financial Year (FY) and Assessment Year (AY). There will be only one term called the Tax Year. Income earned between 1 April 2026 and 31 March 2027 will simply be called Tax Year 2026-27.
- More time to revise income tax returns: Taxpayers will now get more time to correct mistakes in their ITR. A revised return can be filed up to 31 March of the same tax year by paying a small fee. The original filing deadlines remain unchanged—31 July for ITR-1 and ITR-2, and 31 August for non-audit business and trusts.
- Share buybacks taxed as capital gains again: Income from share buybacks will once again be taxed as capital gains instead of dividend income. This means investors can adjust the cost of acquisition. To avoid misuse, promoters will be taxed at fixed rates—22% for corporate promoters and 30% for non-corporate promoters.
- Motor accident compensation made fully tax-free : Any interest received by individuals on compensation awarded by the Motor Accident Claims Tribunal (MACT) will now be completely tax-free. No TDS will be deducted on such interest payments.
- Easier TDS process for NRI property transactions : When a resident buys property from an NRI, applying for a TAN is no longer required. TDS can now be deducted and deposited using a simple PAN-based challan, making the process much easier.
- Sovereign Gold Bonds (SGB): Capital gains exemption on SGBs is now restricted to original subscribers who hold the bonds until maturity.
- Other important changes : STT (Securities Transaction Tax) on stock market F&O trades has been increased—0.05% on futures and 0.15% on options. TCS on overseas tour packages and education or medical remittances has been reduced to a flat 2%. A one-time 6-month window has been provided to disclose foreign assets below ₹20 lakh with immunity.
Related article : Budget 2026: Sovereign Gold Bonds Capital Gains Tax Explained
(Post first published on : 01-Feb-2026)
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