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New Tax Regime FY 2025-26: Slabs, ₹12 Lakh Rebate and Salary Deduction

An AY 2026-27 guide to progressive slabs, the resident-only rebate, ₹75,000 salary deduction and why zero tax does not automatically mean no return.

Tax CoPilot Editorial · Updated 2026-11-14

Interactive article · Markdown source

Rules checked: 14 November 2026. Applies to FY 2025-26 / AY 2026-27. This is an ordinary-income guide, not a calculation for capital gains, lottery income or other special-rate income.

The answer most salary earners need

A qualifying resident individual with ordinary taxable income up to ₹12 lakh can have no income tax payable under the new regime because of the Section 87A rebate. An eligible salary earner with ₹12.75 lakh gross salary and no other income can reach ₹12 lakh taxable income after the ₹75,000 standard deduction. These are not interchangeable limits: gross salary is not CTC, and additional bank interest or dividends can change the result. The Government’s Budget explanation describes the slabs and the exclusion of special-rate income; the Department’s AY 2026-27 threshold guide provides current threshold guidance.

New-regime slabs for AY 2026-27

These rates apply progressively to ordinary taxable income, not to the whole income at the highest rate reached.

The rebate is not a ₹12 lakh exemption

The basic new-regime nil-rate band ends at ₹4 lakh. At ₹12 lakh ordinary taxable income, the progressive slab tax is ₹60,000 before rebate. Section 87A can reduce this for a qualifying resident individual. A non-resident cannot claim this resident-only rebate, and special-rate tax cannot simply be erased by the headline ₹12 lakh rule. Marginal relief may apply just above the ₹12 lakh threshold; it is not an unlimited rebate at higher incomes. Consult the Department’s current threshold guide and official calculator for your facts.

Salary deduction and other income

The salary standard deduction does not apply to bank interest merely because the taxpayer has no salary. Own pension and family pension also need to be classified correctly; family pension is not salary and has separate deduction rules. Use actual gross salary records rather than a package figure containing employer benefits. Add interest from all relevant accounts and deposits, dividends and other taxable receipts before comparing regimes.

Compare old and new regimes using eligible deductions

The new regime is the default, but the cheaper choice depends on your facts and the rules for opting out. Do not subtract ordinary Section 80C investments or HRA exemption in a new-regime estimate. Under the old regime, only eligible and evidenced deductions or exemptions should be used. Employer NPS deductions have their own limits, which can differ by regime. Business or professional income adds election requirements; do not assume switching rules for a salary-only taxpayer apply to everyone.

Zero estimated tax does not settle filing obligations

A nil balance after TDS is not the same as nil tax liability, and nil tax after rebate does not automatically mean no return is required. Mandatory filing can depend on income tests and other statutory conditions. Refunds also depend on valid credits and the official assessment, not just an estimated result.

Your next step

Use Tax CoPilot’s regime comparison for supported ordinary-income cases, then reconcile documents and credits in a preparation draft. The current India workflow excludes complex income and amounts outside its stated scope; its downloads are not portal-uploadable returns. Read the Income-tax Act transition guide before selecting a year for payment or filing.

Official sources

General educational guidance only. Obtain professional help for special-rate income, surcharge, disputed residency or deduction eligibility.

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