Money Basics · Taxes & 80C

Tax slabs

Income tax in India is progressive. You don't pay one flat rate on your entire income. Different slices of your income are taxed at different rates.

New regime slabs (FY2026–27. Unchanged by Budget 2026)

₹0 – ₹4L0% (nil)

₹4L – ₹8L5%

₹8L – ₹12L10%

₹12L – ₹16L15%

₹16L – ₹20L20%

₹20L – ₹24L25%

Above ₹24L30%

Plus 4% health and education cess on the tax amount.

How slabs work, an example

Take a taxable income of ₹15 lakh, that is salary after the ₹75,000 standard deduction. Here's what you actually pay under the new regime:

• ₹4L at 0% = ₹0
• ₹4L at 5% = ₹20,000
• ₹4L at 10% = ₹40,000
• ₹3L at 15% = ₹45,000
• Total before cess: ₹1,05,000
• Cess 4%: ₹4,200
• Total tax: ₹1,09,200

> The 30% rate applies only to income ABOVE ₹24L. Someone at ₹25 lakh pays an effective rate near 13%, not 30%, because every slab below is taxed at its own lower rate.

Section 87A rebate

If your taxable income is ≤ ₹12 lakh in the new regime, a rebate of up to ₹60,000 wipes the bill out and you pay ZERO tax. With the ₹75,000 standard deduction on top, that is a salary of ₹12.75 lakh. In the old regime the rebate is ₹12,500 and stops at ₹5 lakh.

One catch worth knowing before you sell anything: the rebate only offsets tax on slab-rate income. Capital gains taxed at their own rates, 20% short-term, 12.5% long-term on equity, sit outside it.

Old regime slabs (for reference)

₹0–2.5L at 0%, ₹2.5L–5L at 5%, ₹5L–10L at 20%, above ₹10L at 30%. Higher rates than new regime, but deductions lower your taxable income before slabs apply.

Takeaway. Tax slabs are progressive, only the income in each bracket is taxed at that rate. Know your effective tax rate (total tax ÷ total income), not just your slab rate.