Income Tax Calculator India 2026-27 — New Regime vs Old Regime, Zero Tax up to ₹12 Lakh

Under the New Tax Regime for FY 2026-27 a salaried person earning ₹12 lakh per year pays zero income tax. The calculation is: gross salary ₹12,00,000 minus standard deduction ₹75,000 equals taxable income ₹11,25,000. Since taxable income is below ₹12,00,000 the full Section 87A rebate applies making the total tax payable zero. Under the Old Tax Regime with maximum deductions of ₹2 lakh the tax would be approximately ₹1,04,000. So for ₹12 lakh salary the New Regime saves over ₹1 lakh per year.

Yes. Under the New Tax Regime for FY 2026-27 there is effectively zero income tax for taxable income up to ₹12 lakh due to the enhanced Section 87A rebate of up to ₹60,000. For salaried employees the zero-tax limit extends to ₹12.75 lakh gross salary because the ₹75,000 standard deduction reduces taxable income to ₹12 lakh. Important note: this zero-tax benefit applies only to regular income. Special rate incomes like STCG from stocks (15%) and LTCG above ₹1.25 lakh (12.5%) are not covered by the 87A rebate.

New Tax Regime is better for most salaried employees in 2026 especially those earning below ₹20 lakh. Old Tax Regime is better only when your total deductions exceed approximately ₹3.75 lakh — this requires maximum 80C investment of ₹1.5 lakh plus NPS ₹50,000 plus HRA of ₹1 lakh or more plus home loan interest of ₹1 lakh or more. Use the calculator on this page to enter your exact income and deductions to find which regime saves more tax for your specific situation. The New Regime is also simpler as you do not need to maintain investment proofs and deduction receipts.

New Tax Regime slabs for FY 2026-27: Up to ₹4 lakh at 0 percent, ₹4-8 lakh at 5 percent, ₹8-12 lakh at 10 percent, ₹12-16 lakh at 15 percent, ₹16-20 lakh at 20 percent, ₹20-24 lakh at 25 percent and above ₹24 lakh at 30 percent. Additionally 4 percent health and education cess applies on the calculated tax. Section 87A rebate eliminates tax for taxable income up to ₹12 lakh. Old Tax Regime slabs remain unchanged at 0 percent up to ₹2.5 lakh, 5 percent from ₹2.5-5 lakh, 20 percent from ₹5-10 lakh and 30 percent above ₹10 lakh.

NRIs working in Gulf countries like UAE, Saudi Arabia, Oman, Qatar and Kuwait do not pay income tax in India on their Gulf salary. Gulf income is earned and taxed (or tax-free as in UAE) in the Gulf country and is not taxable in India. NRIs pay Indian income tax only on income earned or received in India such as rental income from Kerala property, NRO fixed deposit interest, Indian mutual fund gains and dividends from Indian stocks. NRE fixed deposit interest is completely tax-free in India. NRIs need to file ITR in India only if their Indian-sourced income exceeds ₹2.5 lakh in a financial year.

Section 87A is an income tax rebate that eliminates tax liability for taxpayers whose taxable income is below a threshold. Under the New Tax Regime for FY 2026-27 the 87A rebate is ₹60,000 for taxable income up to ₹12,00,000. Under the Old Tax Regime the rebate is ₹12,500 for taxable income up to ₹5,00,000. The rebate is available to resident Indian individuals only — NRIs are not eligible for Section 87A rebate. Special rate incomes like STCG and LTCG are also not covered by the rebate even if total income is within the limit.

For ₹20 lakh gross salary under the New Tax Regime FY 2026-27: taxable income after ₹75,000 standard deduction is ₹19,25,000. Tax calculation: 0 on first ₹4L, ₹20,000 on ₹4-8L at 5 percent, ₹40,000 on ₹8-12L at 10 percent, ₹60,000 on ₹12-16L at 15 percent, ₹65,000 on ₹16-19.25L at 20 percent. Total tax ₹1,85,000. Adding 4 percent cess ₹7,400. Total tax ₹1,92,400. Monthly in-hand approximately ₹150,633. Under Old Regime with ₹3L deductions the tax would be approximately ₹1,95,000 making New Regime slightly better at this income level.

The last date to file income tax return (ITR) for salaried individuals for FY 2026-27 is July 31 2027. For taxpayers requiring audit the deadline is October 31 2027. Missing the July 31 deadline results in a late filing fee of ₹5,000 under Section 234F (₹1,000 if total income is below ₹5 lakh). Interest under Section 234A at 1 percent per month on tax dues also applies. The Income Tax Department recommends filing early — ITR refunds are processed faster when filed before the deadline. E-filing is available at incometax.gov.in.