Income tax FY 2026-27

How much salary is tax free in India?

Two different numbers, because the two regimes get you there in two different ways — and both are higher than most people assume.

For FY 2026-27, a salaried person pays zero income tax on a gross salary of up to Rs 12,75,000 under the new regime. The Rs 75,000 standard deduction brings taxable income to exactly Rs 12,00,000, and the section 87A rebate of up to Rs 60,000 cancels the entire Rs 60,000 of tax on it. Under the old regime the tax-free ceiling is about Rs 7,75,000 gross — Rs 50,000 standard deduction plus Rs 1.5 lakh of 80C plus Rs 25,000 of 80D brings taxable income under the Rs 5,00,000 rebate limit.

Worked out 2026-09-04 (IST) · Salaried resident individual under 60, FY 2026-27 rates

The two ceilings, side by side

Tax-free salary ceiling, FY 2026-27, salaried individual
	New regime	Old regime
Standard deduction	Rs 75,000	Rs 50,000
Deductions allowed (80C, 80D, HRA...)	None	Rs 1,75,000 typical (80C + 80D)
Rebate under section 87A	Up to Rs 60,000	Up to Rs 12,500
Taxable income at which rebate stops	Rs 12,00,000	Rs 5,00,000
Gross salary that pays zero tax	Rs 12,75,000	about Rs 7,75,000

Tax at salaries just above the line

What the first rupees past the ceiling actually cost, under the new regime.

New regime tax by gross salary, FY 2026-27
Gross salary	Taxable income	Total tax incl. cess	Effective rate
Rs 10,00,000	Rs 9,25,000	Rs 0	0.0%
Rs 12,75,000	Rs 12,00,000	Rs 0	0.0%
Rs 13,00,000	Rs 12,25,000	Rs 26,000	2.0%
Rs 14,00,000	Rs 13,25,000	Rs 81,900	5.8%
Rs 15,00,000	Rs 14,25,000	Rs 97,500	6.5%
Rs 18,00,000	Rs 17,25,000	Rs 1,50,800	8.4%
Rs 20,00,000	Rs 19,25,000	Rs 1,92,400	9.6%
Rs 25,00,000	Rs 24,25,000	Rs 3,19,800	12.8%

Why the old regime ceiling is fuzzy. Rs 7.75 lakh assumes you actually claim Rs 1.5 lakh of 80C and Rs 25,000 of 80D. Add HRA exemption or a home loan interest deduction and the old-regime ceiling rises further — which is exactly the case in which the old regime still beats the new one.

Check your own numbers

Put in your own salary and deductions and see exactly where your tax-free ceiling sits.

Income Tax CalculatorOld vs new regime, FY 2026-27 slabs, standard deduction and cess.

Frequently asked

Is Rs 12 lakh really tax free, or is that only for taxable income?

The Rs 12,00,000 in the rebate rule is taxable income, not gross salary. For a salaried person the Rs 75,000 standard deduction sits between the two, so a gross salary of Rs 12,75,000 lands on Rs 12,00,000 of taxable income and pays nothing. For someone without salary income — a freelancer, say — there is no standard deduction, so the tax-free ceiling is Rs 12,00,000 of net income.

What happens if I earn Rs 12,80,000, just above the limit?

Marginal relief protects you. Without it, crossing the line by Rs 5,000 would trigger about Rs 61,000 of tax. The rule caps your tax at the amount by which taxable income exceeds Rs 12,00,000, so on Rs 12,05,000 of taxable income you pay about Rs 5,000 plus cess, not Rs 61,000. The relief tapers away by roughly Rs 12.75 lakh of taxable income.

Does the section 87A rebate apply to capital gains?

Not to special-rate income. The rebate is denied against long-term capital gains taxed at 12.5% under section 112A and short-term gains at 20% under 111A. If part of your income is equity capital gains, the rebate only shelters the normally-slab-taxed part, so the effective tax-free ceiling is lower than Rs 12.75 lakh.

Is the tax-free limit different for senior citizens?

Under the new regime, no — the slabs and the Rs 12 lakh rebate ceiling are the same at every age. The old regime still gives a higher basic exemption to seniors: Rs 3,00,000 from age 60 and Rs 5,00,000 from age 80, against Rs 2,50,000 for everyone else.

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