Income Tax Calculator FY 2026-2027 | Old vs New Tax Regime Guide

Income Tax Calculator FY 2026-2027

Old vs New Tax Regime Rules After Finance Act 2026

The Finance Act 2026 officially introduces the modernized Income Tax Act, 2025, replacing the decades-old Income Tax Act of 1961. Along with structural reforms and updated compliance formats, taxpayers now continue with two taxation options: New Tax Regime and Old Tax Regime.

The default choice remains the New Tax Regime, offering lower slab rates and simplified taxation for salaried individuals and taxpayers seeking hassle-free filing.

1. Income Tax Slab Rates for FY 2026-2027

Taxpayers can choose between the streamlined New Tax Regime and the traditional Old Tax Regime.

The Default New Tax Regime Slabs

Uniform structure for all age groups.

Net Income Range Tax Rate
Up to ₹4,00,000 NIL
₹4,00,001 to ₹8,00,000 5%
₹8,00,001 to ₹12,00,000 10%
₹12,00,001 to ₹16,00,000 15%
₹16,00,001 to ₹20,00,000 20%
₹20,00,001 to ₹24,00,000 25%
Above ₹24,00,000 30%

The Optional Old Tax Regime Slabs

For individuals claiming 80C, 80D, HRA, and home loan deductions.

Tax Slabs (Under 60 Years) Tax Rate
Up to ₹2,50,000 NIL
₹2,50,001 to ₹5,00,000 5%
₹5,00,001 to ₹10,00,000 20%
Above ₹10,00,000 30%

Note: Basic exemption is ₹3 lakh for Senior Citizens and ₹5 lakh for Super Senior Citizens.

2. Key Differences & Benefits

  • Standard Deduction: Salaried individuals automatically get ₹75,000 under the New Regime compared to ₹50,000 under the Old Regime.
  • Section 87A Rebate: The New Regime offers rebate benefits up to ₹60,000.
  • Tax-Free Threshold: A salaried employee earning up to ₹12.75 lakh can effectively pay zero tax under the New Regime.
  • Cess: A 4% Health and Education Cess applies in both tax regimes.

3. Step-by-Step Tax Calculation Example

Example: Salaried Employee earning ₹15,00,000 under New Tax Regime

Step 1: Apply Standard Deduction Taxable Income = ₹15,00,000 − ₹75,000 = ₹14,25,000 Step 2: Compute Slab-wise Tax
  • Up to ₹4,00,000: NIL
  • ₹4,00,001 to ₹8,00,000: 5% of ₹4,00,000 = ₹20,000
  • ₹8,00,001 to ₹12,00,000: 10% of ₹4,00,000 = ₹40,000
  • ₹12,00,001 to ₹14,25,000: 15% of ₹2,25,000 = ₹33,750
Total Base Tax = ₹93,750 Step 3: Add Education Cess (4%) 4% Cess = ₹3,750 Total Tax Payable = ₹97,500

4. Notable Direct Tax Updates in Finance Act 2026

Form Changes:
Form 16 becomes Form 130 and 26AS becomes Form 168.
HRA Expansion:
Bengaluru, Pune, Hyderabad, and Ahmedabad now qualify for 50% HRA benefit.
Lower TCS:
Foreign remittances and overseas tour packages reduced to 2%.
Revised Returns:
Returns can now be revised till March 31 of the assessment year.

5. Side-by-Side Comparison: Old vs New Regime

Scenario: Gross Salary ₹15,00,000 with ₹4,00,000 deductions under Old Regime

Tax Component Old Tax Regime New Tax Regime
Gross Salary ₹15,00,000 ₹15,00,000
Standard Deduction (-) ₹50,000 (-) ₹75,000
Other Deductions (-) ₹4,00,000 N/A
Net Taxable Income ₹10,50,000 ₹14,25,000
Total Base Tax ₹1,27,500 ₹93,750
4% Cess ₹5,100 ₹3,750
Total Tax Payable ₹1,32,600 ₹97,500

Takeaway: The New Regime saves approximately ₹35,100 in this example.

6. Frequently Asked Questions (FAQs)

Q1. Is the Income Tax Act of 1961 completely replaced?

Yes. The Finance Act 2026 replaces it with the Income Tax Act, 2025.

Q2. Up to what income is no tax payable?

Under the New Regime, effective tax liability can become zero up to ₹12.75 lakh salary income.

Q3. Can salaried employees switch between regimes every year?

Yes. Salaried individuals can change their regime selection annually while filing ITR.

Q4. What happened to Form 16, 26AS, and 12BB?

They are renumbered under the new compliance structure. Form 16 is now Form 130, Form 12BB becomes Form 124, and Form 26AS becomes Form 168.

Q5. Are HRA exemptions allowed under New Regime?

No. To claim HRA exemption and other major deductions, taxpayers must opt for the Old Tax Regime.

Q6. What is the penalty for filing a revised return late?

Revised returns can be filed till March 31 of the assessment year, but delayed submissions after the due date may attract applicable late fees and interest.