Income tax slabs for AY 2027-28

The income tax slabs for assessment year 2027-28 are the rates that apply to income earned in the financial year 2026-27, the year running from 1 April 2026 to 31 March 2027, whose return a central government employee or pensioner files in 2027. For this year the headline news is that there is no news: the Finance Act that followed Budget 2026 left the slabs of both regimes exactly where they were for assessment year 2026-27, so the new regime still makes income up to Rs. 12 lakh tax-free and the old regime still carries its higher rates with the full set of deductions.

One thing does change, but it is structural rather than numerical. The financial year 2026-27 is the first tax year governed by the Income-tax Act 2025 , which comes into force on 1 April 2026 and replaces the 1961 Act. The slabs themselves are unaffected, because rates are set by the annual Finance Act and not by the Income-tax Act, but the language of the law shifts, and a reader consulting the bare Act for this year should expect the new numbering.

This article sets out the slab tables for both regimes for assessment year 2027-28, the Section 87A rebate and the zero-tax thresholds, the standard deduction, the surcharge and cess, the marginal relief that cushions incomes just over Rs. 12 lakh, and the practical question of which regime a government employee should choose for the year. For the current filing year, see the new tax regime explainer; for the head-to-head, see old versus new tax regime .

What assessment year 2027-28 means

Indian income tax works on two years running together. The financial year, also called the previous year, is the year in which income is earned; the assessment year is the following year, in which that income is assessed and the return is filed. So the income of the financial year 2026-27 is assessed in the assessment year 2027-28. When people search for “income tax slabs AY 2027-28” they are almost always asking about the tax on income earned in the financial year 2026-27.

The Income-tax Act 2025 simplifies this vocabulary. It abolishes the separate previous year and assessment year and uses a single tax year, which is the year in which the income is earned. Under the new Act, the income now described as the financial year 2026-27, assessment year 2027-28, is simply the tax year 2026-27 . The return is still filed in 2027, and the tax is the same; only the label is tidier. Because the change of vocabulary can confuse a taxpayer who has filed for decades under the old terms, this page uses the familiar assessment-year label alongside the new tax-year one.

New regime slabs for AY 2027-28

The new tax regime is the default, so unless a taxpayer positively chooses the old regime, the tax for assessment year 2027-28 is computed on this table. The rates, set by the Finance Act 2026 and unchanged from the previous year, are:

The statutory basis of this table is Section 115BAC(1A) of the 1961 Act, carried forward as Section 202 of the 2025 Act. The standard deduction in the new regime is Rs. 75,000 on salary and pension, and the Section 87A rebate of up to Rs. 60,000 makes a total income up to Rs. 12 lakh tax-free for a resident individual. The new regime gives every taxpayer the same Rs. 4 lakh basic exemption, with no higher exemption for age.

Old regime slabs for AY 2027-28

The old tax regime must be chosen, but it remains available for assessment year 2027-28, and it is the better choice for taxpayers with large deductions. For an individual below 60, the slabs, also unchanged, are:

The old regime keeps its age-based basic exemptions, which matter to a government pensioner . A senior citizen aged 60 to 79 has a basic exemption of Rs. 3 lakh instead of Rs. 2.5 lakh, and a super-senior citizen of 80 or above has Rs. 5 lakh, so their income up to Rs. 5 lakh bears no tax before any deduction. The old regime’s Section 87A rebate is up to Rs. 12,500 and covers income only up to Rs. 5 lakh. Its standard deduction is Rs. 50,000, with the government-only entertainment-allowance deduction and the professional-tax deduction on top, and it allows the full catalogue of deductions, from Section 80C and Section 80D to the House Rent Allowance exemption and home-loan interest .

Rebate, standard deduction, and the zero-tax thresholds

The most useful way to read the two tables is by the income at which tax actually begins, because the rebate and the standard deduction push that point well above the first slab.

• New regime. A resident’s tax is nil up to a total income of Rs. 12 lakh, because the Section 87A rebate cancels it. For a salaried person or pensioner the Rs. 75,000 standard deduction is subtracted first, so a salary or pension up to Rs. 12.75 lakh can attract no tax.
• Old regime. The rebate is smaller: nil up to Rs. 5 lakh of total income, and for a salaried person the Rs. 50,000 standard deduction lifts the salary threshold to about Rs. 5.5 lakh before deductions. A senior citizen’s Rs. 3 lakh exemption and a super-senior’s Rs. 5 lakh exemption change the arithmetic further.

The wide gap between the Rs. 12 lakh new-regime line and the Rs. 5 lakh old-regime line is the single biggest reason the new regime is cheaper for most government employees and pensioners, and it is unchanged for assessment year 2027-28.

Surcharge and cess

On top of the slab tax, a surcharge applies at higher incomes and a health and education cess of 4 per cent applies to everyone. The surcharge rates for assessment year 2027-28 are unchanged: 10 per cent above Rs. 50 lakh, 15 per cent above Rs. 1 crore, 25 per cent above Rs. 2 crore, and, in the old regime only, 37 per cent above Rs. 5 crore. The new regime caps the surcharge at 25 per cent, so its effective top rate is lower than the old regime’s. The 4 per cent cess is charged on the tax plus surcharge in both regimes.

Marginal relief

Because the new regime turns tax off completely up to Rs. 12 lakh and then on above it, a taxpayer whose income just crosses Rs. 12 lakh could otherwise face a tax far larger than the extra income. Marginal relief prevents this: where the tax on the income above Rs. 12 lakh would exceed the amount by which the income exceeds Rs. 12 lakh, the tax is limited to that excess. For example, at a taxable income of Rs. 12,10,000 the slab tax would be Rs. 61,500, but marginal relief caps it at Rs. 10,000 plus cess, the amount over Rs. 12 lakh. The relief tapers off at around Rs. 12.70 lakh. A parallel marginal relief applies at each surcharge threshold in both regimes. These reliefs are unchanged for assessment year 2027-28.

The first year under the Income-tax Act 2025

Assessment year 2027-28 is the first year assessed under the Income-tax Act 2025 . Two points follow for a government employee.

First, the slabs do not change because the Act changes. Rates and slabs are fixed each year by the Finance Act, not by the Income-tax Act, so the replacement of the 1961 Act by the 2025 Act does not touch the tables above. A person on the same income, claiming the same deductions, pays the same tax whether the computation is described under the old sections or the new ones.

Second, the section numbers a reader will meet do change. The default-regime provision is now Section 202 rather than Section 115BAC, deductions from salary move to Section 19 rather than Section 16, and the many exemptions of the old Section 10 are gathered into a Schedule. The concepts carry over unchanged; only the references move. For the mapping, see the Income-tax Act 2025 article.

Worked examples

Consider a central government employee with a gross salary of Rs. 14,00,000 for the financial year 2026-27, whose employer contributes Rs. 1,20,000 to the National Pension System under Section 80CCD(2) .

New regime. The only deductions allowed are the Rs. 75,000 standard deduction and the Rs. 1,20,000 employer NPS contribution, bringing the taxable income to Rs. 12,05,000. The slab tax is Rs. 60,000 on the first Rs. 12 lakh bands plus 15 per cent of Rs. 5,000, that is Rs. 750, giving Rs. 60,750; marginal relief caps the tax at the Rs. 5,000 by which the income exceeds Rs. 12 lakh, and the 4 per cent cess brings it to Rs. 5,200.

Old regime. Suppose the same employee claims a Rs. 50,000 standard deduction, a full Rs. 1,50,000 under Section 80C , Rs. 50,000 under Section 80CCD(1B) , Rs. 25,000 under Section 80D , and a House Rent Allowance exemption of Rs. 1,80,000. The taxable income falls to about Rs. 8,45,000, on which the old-regime tax is Rs. 12,500 on the Rs. 2.5 lakh to Rs. 5 lakh band plus 20 per cent of Rs. 3,45,000, that is Rs. 69,000, giving Rs. 81,500 plus cess of Rs. 3,260, about Rs. 84,760.

For this employee the new regime is far cheaper, Rs. 5,200 against about Rs. 84,760, which is the usual result once the Rs. 12 lakh line is in play. The old regime overtakes only when the deductions are larger still, which is exactly the calculation the comparison article and the income-tax calculator run.

Which regime for AY 2027-28

For most salaried central government employees and pensioners, the new regime is the lower-tax choice for assessment year 2027-28, because the Rs. 12 lakh tax-free line and the lower rates beat the old regime even after its deductions. The old regime is worth choosing where deductions and exemptions are large, or for a senior-citizen pensioner with substantial interest income claiming Section 80TTB and health insurance. A salaried person or pensioner may choose the regime afresh each year, so a taxpayer who was in one regime for assessment year 2026-27 can switch for 2027-28 simply by choosing in the return. The mechanics are in how to switch tax regime , and the decision should always be computed both ways.

Related Articles

• Tax regime break-even: when the old regime wins
• New tax regime
• Old tax regime
• Old versus new tax regime
• Section 115BAC
• Section 202 of the Income-tax Act 2025
• Tax year under the Income-tax Act 2025
• Income-tax Act 2025
• Section 87A rebate
• Standard deduction
• Marginal relief on income tax
• Surcharge on income tax
• Health and education cess
• How to switch tax regime
• Deductions allowed in the new tax regime
• Section 80C
• Section 80D
• HRA exemption under Section 10(13A)
• Home-loan interest under Section 24(b)
• NPS tax benefits
• Income tax for government employees
• Income tax for pensioners
• Senior citizen tax
• Professional tax
• TDS on salary
• Income-tax calculator
• Central government employees in India

External references

• Income Tax Department: e-filing portal
• Income Tax Department (about and Acts)
• Central Board of Direct Taxes
• Ministry of Finance

References

1. Finance Act, 2026 (following the Union Budget 2026): the new-regime and old-regime slab tables for the financial year 2026-27, unchanged from the financial year 2025-26, and the Section 87A rebate up to Rs. 60,000 (new regime, total income up to Rs. 12 lakh) and Rs. 12,500 (old regime, total income up to Rs. 5 lakh).
2. Income-tax Act, 1961, Section 115BAC(1A) (the default new-regime slab table), renumbered as Section 202 of the Income-tax Act, 2025, and the standard deduction of Rs. 75,000 in the new regime and Rs. 50,000 in the old regime.
3. Income-tax Act, 1961, the old-regime slab rates for an individual (nil up to Rs. 2.5 lakh, 5 per cent to Rs. 5 lakh, 20 per cent to Rs. 10 lakh, and 30 per cent above), with the higher basic exemption of Rs. 3 lakh for a senior citizen and Rs. 5 lakh for a super-senior citizen.
4. Income-tax Act, the surcharge rates (10, 15, 25, and, in the old regime, 37 per cent) and the 4 per cent health and education cess, together with marginal relief at the rebate threshold and at each surcharge threshold.
5. Income-tax Act, 2025, in force from 1 April 2026 and first applying to the tax year 2026-27 (financial year 2026-27, assessment year 2027-28); rates and slabs continue to be set by the annual Finance Act and are not altered by the change of Act.