Income tax rules for tax year 2026-27: what individuals need to know under the Income-tax Act, 2025
Tax year 2026-27 under the Income-tax Act, 2025: new regime slabs, ₹12 lakh rebate, ₹75,000 standard deduction, capital gains, TDS and due dates.
For tax year 2026-27 (1 April 2026 to 31 March 2027), individuals are taxed under the Income-tax Act, 2025, which replaced the Income-tax Act, 1961 from 1 April 2026. The money rules for most people carried over unchanged. The new regime is the default, with nil tax up to ₹4 lakh and rates rising in ₹4 lakh steps to 30% above ₹24 lakh. A rebate of up to ₹60,000 makes total income up to ₹12 lakh tax-free, and salaried people get a ₹75,000 standard deduction. The old regime with 80C-type deductions is still available if you opt out. Capital gains on listed equity are taxed at 20% (short term) and 12.5% above ₹1.25 lakh (long term). Returns for most individuals are due on 31 July 2027.
This page is the map for the section. Each topic links to a detailed guide. Everything here is general information, not tax advice.
What the new Act changed, and what it did not
The 2025 Act is a rewrite meant to simplify the language and structure of the 1961 law. For an individual the biggest visible changes are:
- One "tax year" instead of two years. The old law taxed income of the "previous year" in the "assessment year" that followed it. The new Act simply refers to the tax year, which is normally the financial year from 1 April to 31 March. Income earned from April 2026 to March 2027 belongs to tax year 2026-27.
- New section numbers. The new regime is in section 202, the rebate in section 156, the investment deduction formerly in 80C is in section 123, and the return filing rules are in section 263. Our section mapping guide lists the ones individuals meet most often.
- TDS rules consolidated. Salary TDS is in section 392, and most other TDS is gathered into one table in section 393.
What did not change in substance for tax year 2026-27: the slab rates and rebate of the new regime (first introduced for FY 2025-26), the standard deduction, the old regime's slabs, the main deduction limits and the capital gains rates set from July 2024.
The two regimes at a glance
| New regime (section 202) | Old regime | |
|---|---|---|
| Status | Default | Only if you opt out |
| Tax-free limit after rebate | Total income up to ₹12 lakh | Total income up to ₹5 lakh |
| Standard deduction | ₹75,000 | ₹50,000 |
| Main deductions | Very few (employer NPS, Agniveer fund and a handful of others) | Investment deduction, health insurance, NPS, HRA, home loan interest and more |
| Top rate | 30% above ₹24 lakh | 30% above ₹10 lakh |
The full slab tables are in the new regime slab guide. Whether the old regime is worth it depends on how much you can genuinely claim. The old vs new regime comparison gives break-even figures. For example, at a gross salary of ₹15 lakh you need roughly ₹5.4 lakh of old-regime deductions and exemptions (beyond the standard deduction) just to match the new regime.
How tax is calculated: the order of steps
- Add up income under each head: salary, house property, business or profession, capital gains and other sources such as interest.
- Subtract the deductions allowed in your regime. In the new regime that is mainly the ₹75,000 standard deduction.
- Split the income: income taxed at slab rates and income taxed at special rates (for example equity capital gains).
- Apply the slab rates to the slab-rate income and the special rates to the rest.
- Subtract the rebate, if total income is within the limit. The rebate only reduces tax at slab rates.
- Add surcharge if income exceeds ₹50 lakh, then the 4% health and education cess.
- Subtract TDS, TCS and advance tax already paid. Pay the balance as self-assessment tax before filing, or claim a refund.
The worked examples guide walks through these steps for four different taxpayers.
Capital gains, TDS and advance tax
- Capital gains. Short-term gains on listed equity and equity fund units (STT paid) are taxed at 20% under section 196. Long-term gains on them are taxed at 12.5% above ₹1.25 lakh a year under section 198. Other long-term assets are taxed at 12.5% without indexation under section 197. See the capital gains rates guide.
- TDS and TCS. Your employer, bank and others deduct tax at source and deposit it against your PAN. This is a prepayment, not your final tax. See TDS and TCS basics.
- Advance tax. If your tax for the year, after TDS, is ₹10,000 or more, you pay it in instalments by 15 June, 15 September, 15 December and 15 March (section 408). Shortfalls attract interest. See the advance tax guide.
Key dates for tax year 2026-27
| Date | What happens |
|---|---|
| 1 April 2026 | Tax year 2026-27 starts; Income-tax Act, 2025 in force |
| Start of the year | Tell your employer which regime to use for salary TDS |
| 15 June 2026, 15 Sep 2026, 15 Dec 2026, 15 Mar 2027 | Advance tax instalments (15%, 45%, 75%, 100% cumulative) |
| 31 March 2027 | Last day for old-regime investments and premiums to count for the year |
| 31 July 2027 | Return due for individuals without business income |
| 31 August 2027 | Return due for non-audit business and professional cases |
| 31 December 2027 | Last date for a belated return (nine months after the tax year ends) |
| 31 March 2028 | Last date for a revised return (twelve months after the tax year ends; fee after nine months) |
Dates can be extended by CBDT circular. Always check the e-filing portal close to the deadline. The due dates and late fee guide explains what happens if you miss them.
Where people go wrong
The most expensive mistakes are simple ones: filing late and losing the old regime, missing interest income shown in the Annual Information Statement, and claiming new-regime deductions that do not exist. The common mistakes guide lists them with fixes.
When to consult a professional
Get help from a chartered accountant if you have business or professional income, foreign income or assets, large or complex capital gains (including unlisted shares or property), ESOPs, or a notice from the department. The self-file or hire a CA guide explains the options.
Frequently asked questions
Is the 2025 Act a new tax on my income?
No. It is a rewrite of the law. For tax year 2026-27 the slabs, rebate and main limits that individuals deal with match those already in force for FY 2025-26.
Do I need to tell anyone that I want the new regime?
No. It is the default. Tell your employer if you want salary TDS under the old regime, and claim the old regime in a return filed by the due date.
Are senior citizens taxed differently?
Under the old regime residents aged 60 to 79 have a ₹3 lakh basic exemption and those aged 80 or more have ₹5 lakh. The new regime has the same slabs for everyone.
Is the 4% cess still added?
Yes. The health and education cess applies on top of income tax and surcharge in both regimes.
Sources
- Income Tax Department: the Income-tax Act, 2025 text, rules, circulars and tax rate tables
- Income Tax e-filing portal: returns, the Annual Information Statement, tax payment and refunds
- India Code: official text of central Acts
- e-Gazette of India: notifications of the Act, rules and amendments
