INCOME TAX FOR SALARIED PERSON

Income tax for a salary holder in India is calculated based on two distinct choices: The New Tax Regime and the Old Tax Regime. The New Tax Regime is the default choice, offering lower tax rates but removing most deductions. For the current financial year (FY 2026-27 / AY 2027-28), you can choose whichever system saves you more money. 

Compare the Tax Slabs

You can use the official Income Tax Department Portal to check rules or file your returns. The table below shows the tax rates for individuals below 60 years of age: 

Income Range (₹) New Tax Regime Rates Old Tax Regime Rates

0 to 2.5 Lakh Nil Nil

2.5 Lakh to 4 Lakh Nil 5%

4 Lakh to 5 Lakh 5% 5%

5 Lakh to 8 Lakh 5%   20%

8 Lakh to 10 Lakh   10%   20%

10 Lakh to 12 Lakh   10%   30%

12 Lakh to 16 Lakh   15%   30%

16 Lakh to 20 Lakh   20%   30%

20 Lakh to 24 Lakh   25%   30%

   Above 24 Lakh   30%   30%

Note: A 4% Health and Education Cess is added to your final tax bill in both regimes. 

Claim Your Standard Deduction

Every salaried worker gets a flat discount on their taxable income. This is called a Standard Deduction. 

• New Tax Regime: You get a deduction of ₹75,000.

• Old Tax Regime: You get a deduction of ₹50,000. 

Enjoy Zero Tax Benefits

The government provides tax rebates that can bring your final tax down to zero: 

1.New Regime Zero Tax: If your total income is up to ₹12 Lakh after your standard deduction, your tax becomes zero due to the Section 87A rebate. This means a gross salary of up to ₹12.75 Lakh can be completely tax-free!

2.Old Regime Zero Tax: If your total income is up to ₹5 Lakh after deductions, your tax is zero. 

Pick the Best Regime For You

To see which system works best, you can use the ClearTax Income Tax Calculator or follow these general rules: 

1. Choose the New Tax Regime if:

• You do not want to block money in long-term investments.

• You want lower tax slabs directly on your income.

• Your gross salary is under ₹12.75 Lakh. 

2. Choose the Old Tax Regime if:

• You pay a large amount of home loan interest.

• You pay high house rent and claim HRA.

• You invest heavily in Section 80C tools like PPF or ELSS.

• You pay for family health insurance under Section 80D