India income tax 2026-27

The Income-tax Act 2025 replaces the 1961 Act for the tax year starting on 1 April 2026. The rates did not move: the Budget 2026 memorandum states that no change in tax rates is proposed. The numbering is what changed, and plenty of pages still quote the old one. The rebate long known as section 87A now sits in section 156, and the new regime slabs in section 202.

The section 156 rebate wipes out tax, up to ₹60,000, while total income stays at ₹12 lakh or less. Without a fix, one more rupee would cost ₹60,000. So the same section caps the tax at whatever exceeds ₹12 lakh: with ₹12.10 lakh of income the slabs give ₹61,500, but you owe only ₹10,000, plus ₹400 of cess.

The surcharge works the same way at ₹50 lakh, ₹1 crore and ₹2 crore: 10%, 15%, then at most 25%. The 4% cess then applies to tax and surcharge, with no relief at all.

The Labour Ministry announced on 16 September 2026 that the EPF wage ceiling would go from ₹15,000 to ₹25,000 a month from 17 September 2026. The employee pays 12% of basic pay and some allowances, or ₹3,000 a month at the ceiling. Above that, joining is not automatic for a new entrant, and we could not read the full EPFO rule, so the calculator leaves the choice to you.

This contribution does not cut tax under the default regime, which removes Chapter VIII except for a few sections. ESI, at 0.75%, covers wages up to ₹21,000 a month: our official texts date from 2021 and 2023, and no 2026 version could be read.

You are resident with 182 days in India in the tax year, or 60 days in the year and 365 days over the four previous years. The 60-day test becomes 120 for a visiting citizen or person of Indian origin whose Indian income exceeds ₹15 lakh. Not-ordinarily-resident status also exists, after nine non-resident years out of ten or 729 days or fewer over seven years.

The ₹12 lakh rebate is for residents only. The calculator removes it if you choose non-resident.

The old regime remains available by option under section 202(4), filed with the return by anyone without business income, but we have not built its slabs or personal deductions in. Professional tax depends on the state and cannot be deducted under the default regime. The sum covers salary only: no capital gains, rent or self-employment. The employer NPS contribution is deductible up to 14% of salary under section 124.