What is an income tax slab?

An income tax slab is a band of income that is taxed at a specific rate. Instead of taxing your whole income at one rate, the system splits it into bands, and each band carries its own rate that rises as income rises. The lowest band is taxed at zero or a low rate, and higher bands at higher rates. Only the income that falls inside a band is taxed at that band's rate, so crossing into a higher slab never taxes your entire income at the top rate. This keeps the system progressive.

What is the difference between the new and old tax regime?

The new regime offers lower slab rates but removes most deductions and exemptions, so your taxable income is close to your gross income after the standard deduction. The old regime keeps higher rates but lets you claim deductions such as Section 80C investments, house rent allowance, and home loan interest, which lower your taxable income. The new regime suits people who claim few deductions, while the old regime can be cheaper for those who invest and claim a lot. You choose whichever gives you the lower tax.

Which regime should I choose?

There is no single right answer, because it depends on how many deductions you claim. Work out your tax under both regimes for your own income and deductions, then pick the one with the lower figure. As a rough guide, if you claim large deductions under Section 80C, house rent, and a home loan, the old regime may win. If you claim little or nothing, the lower rates of the new regime usually make it cheaper. Recalculate each year, since your investments and the rules can both change.

Do the slab rates change every year?

The slab structure can be revised by the government in the annual budget, and the figures for the new and old regime, the standard deduction, the rebate limit, and the cess can all change from one financial year to the next. This is why you should never rely on last year's numbers for a current filing. Always confirm the slabs and thresholds that apply to the specific financial year you are filing for, using the official source or a tax professional, before you finalise your calculation.

What deductions can I still claim under the old regime?

The old regime allows a range of deductions that lower your taxable income. The most used is Section 80C, which covers investments and payments such as provident fund, life insurance premiums, and certain savings schemes up to a limit. You can also claim house rent allowance if you pay rent, interest on a home loan, health insurance premiums under a separate section, and contributions to certain pension schemes. Because these deductions are removed or limited under the new regime, they are the main reason someone chooses the old one.

Income Tax Slabs and Rates for FY 2026-27 (India)

The phrase income tax slab causes more confusion than almost any other tax term, yet the idea behind it is simple. A slab is just a band of income with its own tax rate, and India taxes your income by splitting it into these bands rather than charging one flat rate on the whole amount. Since the introduction of a second regime, there are now two sets of slabs to understand, the new and the old, and choosing between them is the main tax decision most people make each year. This guide lays out both as tables, explains who each suits, and lists the deductions the old regime still allows. The exact figures are revised in the annual budget, so confirm the numbers for the financial year you are filing before you rely on them.

How slabs work

Before looking at any table, it helps to be clear on the mechanics, because this is where people go wrong. Your taxable income is divided into bands. The first band is taxed at the lowest rate, often zero, the next band at a higher rate, and each further band at a rate that rises again. When your income reaches a higher band, only the portion of income sitting inside that band is taxed at the higher rate. The income in the lower bands keeps being taxed at their lower rates. This progressive design means your effective rate, the tax as a share of your total income, is always lower than the top slab rate you reach, and it means earning more never reduces your take-home pay.

The new regime slabs

The new regime is built around lower rates in exchange for giving up most deductions. Under it, your taxable income is close to your gross income after the standard deduction, and the rates climb gently across the bands. Presented as the applicable rates, the structure looks like this, with the exact band boundaries and rates to be confirmed for the current year:

The table shows the shape rather than the exact percentages, because those percentages are set each year and are the part most likely to change. The pattern to remember is that the new regime keeps rates lower across the bands while removing the deductions that would otherwise shrink your taxable income.

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The old regime slabs

The old regime carries higher rates than the new one, and it reaches the higher rates at lower income levels. On its own that sounds worse, and for someone who claims nothing it usually is. The trade-off is that the old regime lets you reduce your taxable income first through a range of deductions. So the higher rates apply to a smaller income figure. For a taxpayer who invests and claims heavily, that smaller base can outweigh the higher rates and produce a lower final tax. This is the whole logic of the old regime: pay a higher rate on a lower income after you have claimed everything you are entitled to.

Who should pick the new regime

The new regime tends to suit people whose deductions are small. Consider it your likely choice if:

You claim few deductions: if you do not have large Section 80C investments, rent, or a home loan, the lower rates win outright.
You want simplicity: with most deductions removed, the calculation is shorter and you keep fewer proofs.
You are early in your career: when investments and commitments are still small, the lower rates usually beat deductions you are not making.
Your income is mostly salary: after the standard deduction, the new regime often gives a lower tax for a straightforward salary.

Who should pick the old regime

The old regime rewards those who use its deductions fully. Lean towards it if:

You max out Section 80C: full use of the limit through provident fund, insurance, and savings schemes shrinks your taxable income noticeably.
You pay rent: house rent allowance can be a large deduction for someone living in rented accommodation.
You have a home loan: interest on a home loan is a significant deduction the new regime largely removes.
You claim several sections together: when health insurance, pension contributions, and 80C stack up, the smaller taxable base can beat the lower new rates.

Common deductions the old regime allows

The deductions are the reason the old regime survives, so it is worth knowing the main ones. The most used is Section 80C, which covers a basket of investments and payments up to a set limit, explained in our Section 80C guide. Alongside it, the old regime commonly allows house rent allowance for those paying rent, interest on a home loan, health insurance premiums under a separate section, and contributions to certain pension schemes. Each has its own rules and limits, and together they can remove a meaningful slice of your income before the slabs apply. Under the new regime these are mostly gone, which is exactly why the comparison between the two regimes comes down to how much you claim.

Confirm the current-year figures

One warning matters more than any single number in this guide. The slab boundaries, the rates within each band, the standard deduction, the rebate limit, and the cess are all set in the annual budget and can change from one financial year to the next. Numbers that were correct last year may not apply to the year you are filing. Never finalise a calculation on old figures. Confirm the slabs and thresholds for the specific financial year from the official source or a tax professional, then apply them. Treat any table, including the one above, as a guide to the structure rather than a source of the exact percentages.

The bottom line

Income tax slabs are simply bands of income with rising rates, and India now offers two sets of them. The new regime trades deductions for lower rates and suits those who claim little, while the old regime keeps deductions and suits those who invest and claim a lot. The right choice is the one that gives you the lower tax when you run your own numbers through both, and you should recheck it every year against the current figures. Keeping tidy records of income and expenses makes that yearly comparison painless. IndiaCRM tracks your business income and invoices in one free app, so read our Section 80C guide, see the full feature list, or get the mobile app and keep your records filing-ready.