Under the new regime for FY 2026-27, the 30% rate applies only to income above Rs 24 lakh, while the first Rs 4 lakh of income carries no tax at all. There are seven slabs in all.
- Up to Rs 4 lakh: nil
- Rs 4 lakh to Rs 8 lakh: 5%
- Rs 8 lakh to Rs 12 lakh: 10%
- Rs 12 lakh to Rs 16 lakh: 15%
- Rs 16 lakh to Rs 20 lakh: 20%
- Rs 20 lakh to Rs 24 lakh: 25%
- Above Rs 24 lakh: 30%
Salaried individuals also get a standard deduction of Rs 75,000, and resident individuals with income up to Rs 12 lakh get a rebate of Rs 60,000.
Worked example for a salary of Rs 12 lakh
Take a resident salaried individual with a gross salary of Rs 12 lakh. The calculation begins with the standard deduction and after it is subtracted, the taxable income will be Rs 11.25 lakh.
The first Rs 4 lakh carries no tax. The next Rs 4 lakh is taxed at the first positive rate which gives Rs 20,000, and the remaining Rs 3.25 lakh falls in the following slab, which gives Rs 32,500.
The tax before rebate is therefore Rs 52,500. The rebate is larger than this amount, so the tax payable becomes nil.
The 30% rate does not enter this calculation at any stage. For such an individual, the standard deduction and the rebate decide the final bill, and the higher slabs have no role.
What calculators do and what is unverified
An income tax calculator for the new regime applies the same steps automatically. It subtracts the standard deduction from the salary, applies each slab rate to the portion of income falling in that slab and then adjusts the tax for the rebate where the taxpayer is eligible. Individuals entering their salary only see the final tax payable.
The rebate is in section 156 of the Income-tax Act, 2025, which replaced section 87A from 1 April 2026, and section 202 is the new regime provision.
