Key idea
India runs two parallel tax systems. One trades deductions for lower rates; the other keeps the deductions. You pick one each year.
Salaried Indians now choose between two regimes. The new regime offers lower slab rates but strips away most deductions and exemptions. The old regime keeps rates higher but lets you claim 80C, 80D, HRA, home-loan interest and more.
New regime slabs (the default)
| Taxable income | 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% |
Under the new regime a ₹75,000 standard deduction applies, and a Section 87A rebate makes income up to ₹12 lakh effectively tax-free (so a salaried person can reach around ₹12.75 lakh with zero tax). The old regime keeps a simpler structure (nil to ₹2.5 lakh, then 5%, 20%, 30%) with a ₹50,000 standard deduction, but pairs it with the full menu of deductions. Figures for FY 2026-27. The Budget can change them each year, so confirm the current year.
The new regime is the default. You are opted into it unless you actively choose the old one, and the choice can usually be revisited each year.
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