India is one of the few countries that runs two complete personal income tax systems in parallel, and since section 115BAC was recast the new regime is the default rather than the opt-in. Its slabs were widened substantially for FY 2025-26, running in INR 4 lakh steps from a nil band up to INR 4 lakh through to 30% above INR 24 lakh, and the section 87A rebate was raised so that a resident individual with taxable income up to INR 12 lakh pays no tax at all. That rebate creates a cliff the slab table does not show, softened by marginal relief so that crossing INR 12 lakh never leaves you worse off in absolute terms. Above the slabs sit two further layers that are easy to forget: a 4% health and education cess charged on the tax plus surcharge, and a surcharge that steps up at INR 50 lakh, INR 1 crore, and INR 2 crore, each step also carrying its own marginal relief. This calculator assembles slab tax, rebate, surcharge, marginal relief, and cess in the order the Act actually requires.

Key Regulatory Parameters & Frameworks (YA 2026)

Rule 01

New Regime Slabs for FY 2025-26

Under section 115BAC as amended, nil up to INR 4,00,000, then 5% to INR 8,00,000, 10% to INR 12,00,000, 15% to INR 16,00,000, 20% to INR 20,00,000, 25% to INR 24,00,000, and 30% above that. The regime is the default: a salaried taxpayer who wants the old regime must opt out, which can be done each year at the time of filing, whereas a taxpayer with business income who opts out may generally return only once.

Rule 02

The Section 87A Rebate and Its Cliff

A resident individual with total income up to INR 12,00,000 under the new regime receives a rebate that reduces the tax to nil, worth up to INR 60,000. Salaried taxpayers effectively reach INR 12,75,000 of gross salary once the INR 75,000 standard deduction is applied. Marginal relief limits the tax on income just above the threshold so that the additional tax never exceeds the additional income. Under the old regime the equivalent rebate threshold remains INR 5,00,000 with a cap of INR 12,500, and the rebate does not apply to income taxed at special rates such as long-term capital gains under section 112A.

Rule 03

Old Regime Slabs and Deductions

The old regime charges nil to INR 2,50,000, 5% to INR 5,00,000, 20% to INR 10,00,000, and 30% above, with higher exemption limits for senior and very senior citizens. It preserves the deductions the new regime removes: section 80C up to INR 1,50,000, section 80D for health insurance premiums at INR 25,000 rising to INR 50,000 for senior citizens, section 80CCD(1B) for an additional INR 50,000 of National Pension System contributions, and section 24(b) interest of up to INR 2,00,000 on a self-occupied property.

Rule 04

Surcharge Steps and Marginal Relief

Surcharge on the income tax itself is 10% where total income exceeds INR 50 lakh, 15% above INR 1 crore, and 25% above INR 2 crore. The old regime carries a further 37% band above INR 5 crore, which the new regime caps at 25%, making the new regime's effective top rate materially lower for very high earners. Each threshold carries marginal relief so that the extra tax from crossing it cannot exceed the extra income, and surcharge on capital gains taxed under sections 111A and 112A is itself capped at 15%.

Rule 05

Cess, Advance Tax, and the AIS

A health and education cess of 4% applies to income tax plus surcharge, so it compounds on the surcharge rather than sitting alongside it. Advance tax is payable in four instalments by 15 June, 15 September, 15 December, and 15 March at cumulative rates of 15%, 45%, 75%, and 100%, with interest under section 234B for shortfall and section 234C for deferment. The Annual Information Statement and Form 26AS pre-populate reported income and tax credits, and unexplained divergence from them is a common trigger for scrutiny.

New Regime Computation at Two Income Levels

Scenario Context: Resident individual for FY 2025-26 under the default new regime, shown first at INR 10,00,000 of total income to demonstrate the rebate and then at INR 18,00,000 to show a real liability.

Calculation Stage	Computed Value
At INR 10,00,000: tax on the first INR 4,00,000	Nil
At INR 10,00,000: INR 4,00,000 to INR 8,00,000 at 5%	INR 20,000
At INR 10,00,000: INR 8,00,000 to INR 10,00,000 at 10%	INR 20,000
At INR 10,00,000: tax before rebate	INR 40,000
At INR 10,00,000: section 87A rebate	INR 40,000, because total income does not exceed INR 12,00,000
At INR 10,00,000: total payable	Nil, with no cess since there is no tax to charge it on
At INR 18,00,000: slab tax across the nil, 5%, 10%, 15%, and 20% bands	INR 20,000 plus INR 40,000 plus INR 60,000 plus INR 40,000, giving INR 1,60,000
At INR 18,00,000: section 87A rebate	Not available, as total income exceeds INR 12,00,000
At INR 18,00,000: health and education cess at 4%	INR 6,400

Final Deducted Result:Nil tax at INR 10,00,000 and INR 1,66,400 at INR 18,00,000, an effective rate of 9.2%. The rebate is the dominant feature of the new regime below INR 12 lakh and is the reason a slab table read in isolation overstates tax for most middle-income taxpayers. Marginal relief just above INR 12 lakh prevents a cliff, so an income of INR 12,10,000 does not suddenly attract the full INR 61,500 the slabs alone would suggest.

Frequently Asked Questions (FAQ)

What is the tax filing deadline in India?▼

For individuals not subject to audit the due date is 31 July of the assessment year, so 31 July 2026 for FY 2025-26, though the Central Board of Direct Taxes has extended it in several recent years. Taxpayers subject to audit generally file by 31 October. A belated or revised return may be filed by 31 December of the assessment year, and an updated return under section 139(8A) is possible for a longer window on payment of additional tax.

How does marginal relief actually work?▼

It caps the additional tax created by crossing a threshold at the amount of income by which you crossed it. If total income is INR 12,10,000 under the new regime, the slab tax would be around INR 61,500 while the extra income above the rebate threshold is only INR 10,000, so marginal relief limits the tax to roughly that INR 10,000 plus cess. The same mechanism applies at each surcharge step, at INR 50 lakh, INR 1 crore, and INR 2 crore, which is why no Indian threshold produces a genuine cliff.

Can I switch between the old and new regimes each year?▼

A salaried individual with no business income may choose the regime afresh each year at the time of filing, and the choice made in a declaration to an employer for TDS purposes does not bind the return. A taxpayer with income from business or profession who opts out of the new regime may generally exercise the option to return only once, after which the new regime applies permanently, so the decision needs to be made with more care where there is business income.

Why does the surcharge matter more than the slab at high incomes?▼

Because it is charged on the tax, not on income, and the cess is then charged on tax plus surcharge, so the two compound. At the 30% slab with a 25% surcharge and 4% cess, the effective marginal rate reaches roughly 39%, and under the old regime's 37% surcharge band above INR 5 crore it approaches 42.7%. The new regime's cap of 25% is the single largest reason very high earners prefer it even when they hold deductions that would otherwise favour the old regime.