Income-tax Slab Rates for Individuals – FY 2026-27 (AY 2027-28)
(As per provisions of the Income-tax Act and Finance Act, 2026)
This article is a detailed, self-contained reference on income tax rates, rebate limits, surcharge, and cess applicable for the financial year 2026-27 for different categories of taxpayers.
1. Taxable Income & Tax Regimes – Individuals, HUFs, AOPs, BOIs, Artificial Juridical Persons
Income tax for natural persons and certain unincorporated entities is determined under Section 202/115BAC of the Income-tax Act and related Schedules.
A. New Tax Regime Slab Rates
| Total Taxable Income (₹) | Tax Rate (%) |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
| ➡ Applicable to individuals, HUFs, AOPs, BOIs, artificial juridical persons unless an option under the old regime is exercised |
B. Old Tax Regime Slab Rates (via Section 115BAC Option)
Applicable only if old regime is elected at the time of ITR filing:
Individuals & HUFs
| Income Bracket (₹) | Tax Rate (%) |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
| (Same rates for HUFs and most unincorporated entities that elect the old regime.) (Income Tax India) |
2. Rebate Under Section 87A (Individuals & Resident HUFs)
Section 87A Rebate (New Regime)
- A resident individual or resident HUF with total taxable income ≤ ₹12,00,000 is eligible for a rebate under Section 87A, which can reduce the total tax liability to zero before surcharge and cess.
- Maximum rebate amount available = ₹60,000.
➡ This effectively makes income up to ₹12 lakh tax-free under the new regime after rebate if no other special income applies.
Section 87A Rebate (Old Regime)
Under the old regime, the rebate continues for resident individuals/HUFs with income up to ₹5,00,000.
➡ Maximum rebate under old regime = ₹12,500.
3. Surcharge on Taxable Income (All Assessees)
For FY 2026-27, surcharge is leviable on the amount of income tax (before cess) based on total income levels:
A. Individuals, HUFs, AOPs, BOIs, Artificial Juridical Persons**
| Total Income (₹) | Surcharge on Tax (%) |
|---|---|
| Up to ₹50,00,000 | Nil |
| ₹50,00,001 – ₹1,00,00,000 | 10% |
| ₹1,00,00,001 – ₹2,00,00,000 | 15% |
| ₹2,00,00,001 – ₹5,00,00,000 | 25% |
| Above ₹5,00,00,000 | 25% (capped; not 37% under new Section 115BAC) |
| ➡ Surcharge may differ on special incomes (like dividends or capital gains) where different caps apply |
B. Co-operative Societies
- Surcharge is imposed at 7% on tax where total income > ₹1 crore but ≤ ₹10 crore.
- 12% surcharge where total income > ₹10 crore.
C. Firms (including LLPs)
A surcharge of 12% on income tax where total income > ₹1 crore.
D. Companies
- Surcharge on companies varies based on turnover and regime:
- Domestic companies under normal tax (25%/30%) face surcharge at 7% if total income > ₹1 crore but ≤ ₹10 crore, 12% if > ₹10 crore.
- Companies taxed under special concessional sections (see next section) usually have a flat 10% surcharge.
- Foreign companies face 2% surcharge if income > ₹1 crore but ≤ ₹10 crore, and 5% if > ₹10 crore.
4. Corporate & Other Entity Tax Rates
A. Domestic Companies
| Category | Tax Rate on Total Income (%) | Surcharge |
|---|---|---|
| Domestic company with turnover/gross receipts ≤ ₹400 crore in PY 2024-25 | 25% | 7% (if income > ₹1 cr), 12% (if > ₹10 cr) |
| Domestic company not eligible for concessional option | 30% | 7%/12% as above |
| Domestic company opting for concessional regime under section 200 | 22% | 10% surcharge |
| Domestic company eligible under section 115BA (if applicable) | 25% | 10% surcharge |
| ➡ Surcharge and cess apply post computation |
Note: Minimum Alternate Tax (MAT) may apply (typically at 15% of book profit) for companies not under concessional regimes, but specifics depend on fulfilment of conditions.
B. Foreign Companies
- Tax rate = 35% on total income except special rates on certain incomes (royalty, fees for technical services etc.).
- Surcharge: 2% (income > ₹1 cr ≤ ₹10 cr) or 5% (income > ₹10 cr).
C. Partnership Firms (Including LLPs)
- Flat tax rate = 30% on total income.
- Surcharge = 12% if total income > ₹1 crore.
D. Co-operative Societies
- Tax charged at rates similar to unstructured slabs (10%, 20%, 30% based on income ranges), with surcharge as above.
- Option available to pay at 22% (opted under section 203) with 10% surcharge if conditions are satisfied.
E. Local Authorities
- Tax rate = 30% on total income.
- Surcharge = 12% if total income exceeds ₹1 crore.
5. Health & Education Cess
Cess @ 4% is levied on income tax + surcharge for all categories of assessees (individuals, companies, firms, HUFs, AOPs, etc.).
➡ This is a statutory cess charged over the computed tax obligation.
6. Key Notes & Additional Considerations
A. Marginal Relief
Where surcharge causes disproportionate increase, marginal relief provisions ensure the overall tax plus surcharge does not exceed a specified cap.
B. Special Rate Incomes
Certain incomes (e.g., long-term capital gains, short-term capital gains under section 111A, lottery income, etc.) may be taxed at prescribed special rates separate from slabs above.
➡ These are outside regular slab rates and are governed by separate sections. (Statutory – not shown above but apply as per Act.)
C. Applicability
Tax rates above apply to income computed under the relevant chapter of the Income-tax Act for FY 2026-27 and are used in computing tax liability for Assessment Year 2027-28.
7. Example: How Tax Is Computed (Illustrative)
Suppose an individual resident has taxable income of ₹15 lakh under the new regime:
₹0 – ₹4 lakh → Nil
₹4 lakh – ₹8 lakh → 5% on ₹4 lakh = ₹20,000
₹8 lakh – ₹12 lakh → 10% on ₹4 lakh = ₹40,000
₹12 lakh – ₹15 lakh → 15% on ₹3 lakh = ₹45,000
→ Total before surcharge/cess: ₹1,05,000
If Section 87A rebate applies fully (taxable ≤ ₹12 lakh), tax becomes zero before surcharge/cess; else surcharge and cess incorporated as per rules.