📊 Finance Bill 2026 — Chapter II

New Income Tax Slabs for FY 2026-27

The Finance Bill 2026 revises income tax rates for Assessment Year 2026-27. Here’s everything you need to know about the new slabs, surcharge, rebate, and the new vs old tax regime — explained in plain language.

🆕 New Tax Regime Slabs (Default — Section 115BAC)

Under the Finance Bill 2026, the New Tax Regime remains the default for individuals. The basic exemption limit is ₹4,00,000 for taxpayers under the new regime (Section 115BAC). Slabs:

📈 Surcharge Rates

Surcharge is levied on top of income tax for high-income earners. For individuals under the new regime:

• Total Income up to ₹50 Lakh: No surcharge
• ₹50 Lakh – ₹1 Crore: 10% surcharge
• ₹1 Crore – ₹2 Crore: 15% surcharge
• Above ₹2 Crore (new regime): Capped at 25% (marginal relief applies)
• Health & Education Cess: 4% on (tax + surcharge)

🎁 Rebate under Section 87A

A full tax rebate under Section 87A is available to resident individuals whose total taxable income does not exceed ₹12,00,000 under the new regime — effectively making income up to ₹12 Lakh tax-free (before surcharge & cess). For the old regime, the rebate limit remains ₹5,00,000.

🌾 Agricultural Income & Tax Treatment

Where an individual has net agricultural income exceeding ₹5,000 in addition to normal income, the agricultural income is used to determine the applicable tax rate via a partial integration method (formula: Zo = Xo − Yo). Agricultural income itself remains exempt but pushes total income into a higher slab.