India offers two parallel tax regimes: the New Regime (lower rates 0-30%, no deductions) and Old Regime (higher rates but ₹1.5+ lakh in deductions under Section 80C/80D). New Regime is default from FY2024-25. But the 30% headline rate is misleading—add surcharge (10-25% of tax for incomes above ₹50 lakh, capped at 25% under the New Regime even above ₹2 crore) and 4% health & education cess. True top rate reaches 39% for ₹2 crore+ earners under the New Regime (the Old Regime's surcharge continues to 37%, a 42.7% top rate, for those who opt out of the New Regime). A ₹15 lakh earner pays roughly ₹1.34 lakh (~8.9%) under New Regime (₹97,500 income tax and cess + ₹36,000 mandatory employee EPF, i.e. 12% of a basic salary assumed to be half of gross, capped at the ₹25,000/month wage ceiling; EPF is retirement saving, not a tax), or ~₹97,500 (~6.5%) income tax and cess alone. TDS (Tax Deducted at Source) means most salaried employees have tax auto-deducted. Advance tax quarterly payments required if liability exceeds ₹10,000. Filing deadline is July 31 (October 31 if audited). NRIs are taxed only on India-sourced income. Use our calculator to estimate your Indian tax liability.
Note: These are marginal rates — you only pay the higher rate on income within each bracket.
Source: Income Tax India
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New Regime slabs for FY 2026-27: 0% up to ₹4 lakh, 5% on ₹4-8 lakh, 10% on ₹8-12 lakh, 15% on ₹12-16 lakh, 20% on ₹16-20 lakh, 25% on ₹20-24 lakh, and 30% above ₹24 lakh. Standard deduction of ₹75,000 available. Section 87A rebate makes income up to ₹12 lakh effectively tax-free. New Regime is default but you can opt for Old Regime.
Choose Old Regime if you have significant deductions: Section 80C (₹1.5 lakh for PF, ELSS, insurance), 80D (health insurance ₹25,000-75,000), HRA exemption, or home loan interest (₹2 lakh). Rule of thumb: if deductions exceed ₹2.5-3 lakh, Old Regime saves money. Salaried employees can switch each year; business owners must commit for the year.
Surcharge is extra tax on high earners under the New Regime: 10% surcharge on income ₹50 lakh-1 crore, 15% on ₹1-2 crore, and 25% above ₹2 crore — capped at 25% even for very high earners (the Old Regime's surcharge instead continues rising to 37% above ₹5 crore). The surcharge applies on the tax amount, not income. Combined with 4% cess, a ₹2 crore+ earner under the New Regime pays 30% × 1.25 × 1.04 = 39% effective marginal rate (vs 42.7% under the Old Regime for ₹5 crore+ earners).
TDS (Tax Deducted at Source) means employers, banks, and payers automatically deduct tax from salary, interest, rent, etc. Most salaried employees need no action—TDS covers their liability. Self-employed and those with non-TDS income exceeding ₹10,000 tax liability must pay advance tax quarterly: 15% by June 15, 45% by Sept 15, 75% by Dec 15, 100% by March 15.
NRIs (Non-Resident Indians) pay tax only on India-sourced income: Indian salary, rental income from Indian property, capital gains on Indian assets, and interest from Indian banks. Foreign income is not taxable. NRI status: outside India for 182+ days in the financial year. RNOR (Returning NRI) status provides 2-3 year transition with limited taxation on foreign income.
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Last Updated: October 2026