Taxes
India — Tax: Income Tax
For FY 2026-27, the new tax regime (Section 115BAC) remains the default and continues with a basic exemption of ₹4 lakh, rates rising from 5% to 30% across slabs, and a Section 87A rebate that makes income up to ₹12 lakh effectively tax-free for resident individuals (NRIs cannot claim this rebate). The old regime (with deductions like 80C, HRA, home loan interest) still exists as an opt-in, with a lower ₹2.5 lakh basic exemption (₹3 lakh/₹5 lakh for resident senior/super-senior citizens — not available to NRIs). Budget 2026 made no changes to slab structure or rates from FY 2025-26.
VerifiedGovernment / official sourceIncome Tax Department of India / Union Budget 2026Last reviewed: 2026-07-20
Key facts
- New tax regime (default, Section 115BAC): ₹4 lakh basic exemption; rates from 5% to 30% by slab.
- Section 87A rebate makes income up to ₹12 lakh tax-free for resident individuals under the new regime — NRIs are not eligible for this rebate.
- Old regime basic exemption is ₹2.5 lakh (₹3 lakh for resident seniors 60-79, ₹5 lakh for resident super-seniors 80+) — the higher senior thresholds do not apply to NRIs.
- NRIs are taxed only on India-sourced income (Indian salary, rental income, capital gains on Indian assets, NRO account interest) — foreign-sourced income is not taxed in India.
- No slab or rate changes were made in Budget 2026 versus FY 2025-26.
Required documents
- PAN (Permanent Account Number)
- Form 16 (for salaried employees)
- Bank statements
- Investment/deduction proofs (old regime only)
Common mistakes
- Assuming NRIs get the same Section 87A rebate or senior citizen exemption thresholds as resident taxpayers — they do not.
- Defaulting into the new regime without comparing against the old regime when significant deductions (80C, home loan interest, HRA) would make the old regime cheaper.