CalculatrZero Tax up to ₹12 Lakh: FY 2026-27 Rules
Table of Contents
Under the Income-tax Act, 2025, a resident individual taxed in the new regime pays no income tax for tax year 2026-27 if total income is up to ₹12,00,000. This happens through a rebate under section 156, not through a ₹12 lakh slab. This page shows the slabs, the rebate rule, and the arithmetic. The examples assume only salary income and no other deductions.
New Regime Slabs (Tax Year 2026-27)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Section 202(1) slabs are the default for tax year 2026-27, and an individual can opt out under section 202(4). Health and Education Cess of 4% is added on the tax, with no marginal relief on the cess.
The Section 156 Rebate
Section 156 of the Income-tax Act, 2025 gives a rebate to a resident individual:
- Taxed under section 202(1) (the new-regime slabs): if total income is up to ₹12,00,000, the rebate is 100% of the tax or ₹60,000, whichever is less.
- Marginal relief: if income is above ₹12,00,000 and the tax is more than the amount by which income exceeds ₹12,00,000, the rebate equals the tax minus that excess. So the tax cannot be more than the income above ₹12 lakh.
- Section 156(1) also gives a rebate of 100% of the tax or ₹12,500, whichever is less, if total income is up to ₹5,00,000. We have not checked the old-regime slabs here, so this page does not work an example for it.
The slab tax on ₹12,00,000 is exactly ₹60,000, which is why the rebate brings it to nil.
Worked Examples
These are our own calculations from the slabs and rebate rule above, for a resident individual with only salary income, in the new regime. They are examples, not tax advice.
| Total Income | Slab Tax | Rebate (s.156) | Tax Before Cess |
|---|---|---|---|
| ₹12,00,000 | ₹60,000 | ₹60,000 | Nil |
| ₹12,10,000 | ₹61,500 | ₹51,500 | ₹10,000 |
At ₹12,10,000 the income is ₹10,000 above the limit. The slab tax (₹61,500) is more than ₹10,000, so marginal relief caps the tax at ₹10,000. Cess of 4% on that is ₹400.
What About Salaried Income?
For tax year 2026-27 the standard deduction is ₹75,000 for a salaried individual taxed under section 202(1), or the salary if that is lower (section 19). So a salary of ₹12,75,000 less ₹75,000 gives total income of ₹12,00,000, and the tax is nil if there is no other income and no other deduction. Other income such as interest, rent or capital gains is added to total income before the rebate test.
What the Rebate Does Not Cover
- The rebate cannot be more than the tax at the section 202(1) slab rates. Tax on income taxed at special rates is not rebated.
- It does not remove Health and Education Cess on any tax that remains after the rebate.
- It applies to the new-regime slabs. Most deductions, such as 80C-type investments, are not available in the new regime, so they do not reduce income for this test. See our guide on how to save income tax for the regime split.
- TDS: your employer deducts tax on estimated income, so if your income is within the limit, check that your TDS is nil too. See our TDS on salary guide.
Confirm your own position with the official calculators and rules on incometaxindia.gov.in or a tax professional. Rules can be amended.
Sources: slabs and cess are from the Finance Bill 2026 explanatory memorandum (section 202). The rebate (section 156), standard deduction (section 19) and the new-regime deduction limits (section 202(2)) are from the Income-tax Act, 2025 as amended by the Finance Act, 2026. We read the section text on indiacode.ecourtsindia.com, a non-government mirror, and cite the official Act above. The worked examples are our own arithmetic.