What changed from 1 April 2026?
India now uses the Income-tax Act, 2025 for income earned from 1 April 2026 onward. One of the most visible changes is terminology: the earlier concepts of "previous year" and "assessment year" are replaced, for current income, by a single Tax Year. Thus, income earned from 1 April 2026 to 31 March 2027 falls in Tax Year 2026-27.
The new law is intended to simplify structure and language without disturbing the basic continuity of the tax system. Taxpayers may still encounter the 1961 Act when filing or responding to proceedings for earlier years.
New tax regime remains the default
For eligible individuals and other specified persons, the concessional or "new" tax regime continues as the default regime. Taxpayers who satisfy the prescribed conditions may opt for the old regime where that produces a better result, particularly where substantial deductions or exemptions are available.
Income-tax slabs for Tax Year 2026-27
Budget 2026 did not alter the principal slab structure already applicable to the new regime. For individual taxpayers covered by the regime, the slab rates are:
| Total 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% |
Rebate for resident individuals
Under the new regime, a resident individual may qualify for a rebate that can reduce income tax to nil where the applicable total income is within the statutory threshold. For the current structure, the rebate is up to ₹60,000 where qualifying total income does not exceed ₹12,00,000, subject to the law applicable to the nature of income and other conditions.
The rebate should not be confused with a basic exemption limit. Tax is first computed under the slab rates and the eligible rebate is then applied. Special-rate income may require separate treatment, so taxpayers with capital gains, lottery income or other specially taxed income should verify the computation before relying on a zero-tax result.
Old regime or new regime: which one should you choose?
There is no single answer for every taxpayer. The new regime generally offers lower slab rates and a simpler computation, but many deductions and exemptions available under the old regime are restricted or unavailable in the default regime. A taxpayer should compare both methods using actual figures rather than assuming one regime is always better.
| Factor | New regime | Old regime |
|---|---|---|
| Default status | Default for eligible taxpayers | Requires opting out of default regime where permitted |
| Slab structure | Lower, wider progressive slabs | Traditional slab structure |
| Deductions/exemptions | Many are restricted | Broader access to eligible deductions and exemptions |
| Best suited to | Taxpayers with limited deductions | Taxpayers with substantial eligible deductions/exemptions |
What happened to deductions such as Section 80C and Section 80D?
Deductions familiar from the 1961 Act remain relevant mainly when computing tax under the old-regime framework for periods to which that framework applies. The new regime is designed around concessional rates with fewer deductions. Accordingly, investments, insurance premiums, housing-loan payments and similar items should be evaluated according to the selected regime and the law governing the relevant year.
Taxpayers should avoid choosing investments solely for tax saving. Liquidity needs, insurance adequacy, retirement planning, risk and expected return are equally important.
Housing loan interest and tax planning
Housing-loan interest can have different consequences depending on whether a property is self-occupied or let out and whether the taxpayer uses the old or new regime. The earlier practice of presenting the entire housing-loan interest limit as a universally available "tax saving" can be misleading. The actual benefit depends on eligibility, income from house property, regime selection and the applicable statutory conditions.
Practical tax-planning checklist for 2026-27
- Identify whether the income belongs to Tax Year 2026-27 under the Income-tax Act, 2025 or to an earlier year governed by the 1961 Act.
- Estimate total income under each available regime before making year-end investments.
- Review salary components, house-property income, capital gains, interest income and business or professional income separately.
- Check TDS and advance-tax obligations during the year instead of waiting until return filing.
- Keep evidence for deductions, exemptions, investments and expenses where the selected regime requires them.
- Use the Income Tax Department's official calculator or estimator for a current computation.
Conclusion
The personal income-tax system in 2026-27 is materially different from the framework that existed in 2015. The most important current developments are the commencement of the Income-tax Act, 2025, the introduction of the Tax Year concept, continuation of the default new tax regime and the higher rebate threshold under the current slab structure. Taxpayers should base planning on present law and their actual income profile rather than on outdated headline "tax-saving" totals.
This page provides general information and is not a substitute for professional advice based on individual facts.