Old vs New Tax Regime for Tax Year 2026-27 — Slabs, Rebate and How You Opt Out Now
Quick answer: For Tax Year 2026-27 the new regime (Section 202 of the Income-tax Act 2025) is the default: nil up to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above, with a ₹75,000 standard deduction and a Section 156 rebate of up to ₹60,000 that makes income up to ₹12 lakh tax-free for residents. Budget 2026 left the slabs unchanged. The opt-out is exercised in the return itself under Rule 136 — there is no Form 10-IEA successor. The old regime only pays off when deductions are large; we run both numbers before every return.
Last verified 4 October 2026 — rules on this page checked against the current notifications. We update it the day a rule changes.
New regime slabs — Tax Year 2026-27 (s.202)
| Total income | Rate |
|---|---|
| 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% |
Rebate (s.156): up to ₹60,000 for resident individuals, so no tax up to ₹12 lakh (₹12.75 lakh for salaried with the ₹75,000 standard deduction), with marginal relief just above. Surcharge and 4% cess apply as before.
How to choose
- Salaried with few deductions: new regime almost always
- Home-loan interest + 80C + 80D + HRA: the old regime starts winning only when total deductions run into several lakh — we compute the break-even for your exact income rather than quote a rule of thumb
- Business/professional income: switching back to the new regime after opting out is restricted; the choice is effectively long-term
- How to opt out: in the return under Rule 136 (within the s.263(1) due date for business cases) — pages telling you to file "Form 44" are mixing it up with the foreign-tax-credit form
What we do
- Both-regime computation with salary structuring (HRA, NPS employer contribution, perquisites) before Form 130 is issued
- Regime election for proprietors and professionals with the lock-in explained; advance-tax planning on the chosen regime
- Free calculators for a first pass
Section and form numbers are quoted from the Income-tax Act, 2025, the Income-tax Rules, 2026 and CBDT's form FAQs; anything not yet confirmed on an official page is marked and checked at filing, never estimated.
Talk to us before you file anything
Frequently asked questions
Is income up to ₹12 lakh tax-free in 2026-27?
Yes for resident individuals under the new regime — the Section 156 rebate (up to ₹60,000) wipes out the tax; salaried taxpayers add the ₹75,000 standard deduction, so ₹12.75 lakh.
Did Budget 2026 change the slabs?
No — the Tax Year 2026-27 new-regime slabs are the same as those introduced for 2025-26.
Is Form 10-IEA still needed to opt out of the new regime?
No. Under Rule 136 of the Income-tax Rules 2026 the option is exercised or withdrawn in the return of income itself.
What is the standard deduction in the new regime?
₹75,000 for salaried and pensioners; the old regime keeps ₹50,000.
Can I switch regimes every year?
Salaried taxpayers without business income can choose each year; those with business or professional income face restrictions on switching back after opting out.
Is HRA or 80C allowed in the new regime?
No — the new regime gives up most deductions and exemptions in exchange for lower slab rates.
Which section is the new regime under now?
Section 202 of the Income-tax Act 2025 (ex-115BAC); the rebate is Section 156 (ex-87A).
When does the old regime still win?
When deductions (home-loan interest, 80C, 80D, HRA) are large enough that the old-regime tax falls below the new-regime figure — we compute the break-even for your income.