Tax Year 2026–27 Statutory Reference

1. New Tax Regime Slabs (Section 202)

Under Section 202 of the Income-tax Act, 2025, ordinary taxable income for individuals is taxed at the following marginal rates:

2. Standard Deduction (Section 19)

Section 19 governs deductions from salary income:

• New Tax Regime: ₹75,000 flat standard deduction for all salaried individuals and pensioners.
• Old Tax Regime: ₹50,000 standard deduction.
• Scope Limitation: The deduction is limited to actual gross salary received if gross salary is less than the deduction amount.

3. Resident Tax Rebate & Marginal Relief (Section 156)

Section 156 replaces legacy Section 87A of the 1961 Act:

• Full Rebate: Resident individuals with total income not exceeding ₹12,00,000 receive a rebate of 100% of the income tax payable (capped at ₹60,000).
• Marginal Relief: Where total taxable income slightly exceeds ₹12,00,000, the rebate reduces tax so that the net tax payable does not exceed the income in excess of ₹12,00,000.

4. Employer NPS Deduction (Section 124)

Replaces legacy Section 80CCD(2):

• Under the New Tax Regime, employer contributions to the National Pension System (NPS) are deductible from taxable income up to 14% of salary (Basic + DA) for Central/State Government and private corporate employees.
• Under the Old Regime, the deduction limit is 10% for non-government employees.

5. Surcharge & Cess Structure

Health and Education Cess of 4% applies to the aggregate of income tax and surcharge across all brackets.