The Finance Bill, 2026, has proposed no change in income-tax rates for the FY 2026-27 (AY 2027-28) across all categories of taxpayers. The existing tax slabs, surcharge structure, and health and education cess will continue to apply, ensuring rate stability for individuals, firms, companies and other entities.
No Change in Tax Rates Across Regimes
The Bill confirms that income tax rates specified under various special taxation sections, such as Section 115BAC (new tax regime), Section 115BAA and 115BAB (domestic companies), and Section 115BAD/115BAE (co-operative societies) will remain exactly the same as those applicable in the previous year.
Similarly, the rates mentioned in Part I-A of the First Schedule to the Finance Bill, 2026, applicable for Assessment Year 2026-27, have been retained without modification.
Individual & HUF Tax Rates Under New Tax Regime (Section 115BAC)
For individuals, HUFs, AOPs, BOIs, and Artificial Juridical Persons opting for the default new tax regime under Section 115BAC(1A), the slab structure continues as follows:
- Up to Rs 4,00,000 - Nil
- Rs 4,00,001 to Rs 8,00,000 - 5%
- Rs 8,00,001 to Rs 12,00,000 - 10%
- Rs 12,00,001 to Rs 16,00,000 - 15%
- Rs 16,00,001 to Rs 20,00,000 - 20%
- Rs 20,00,001 to Rs 24,00,000 - 25%
- Above Rs 24,00,000 - 30%
These rates will apply unless the taxpayer exercises the option to opt out of the default regime as per Section 115BAC(6).
Old Tax Regime Rates Also Unchanged
For taxpayers continuing under the old tax regime, the slab rates under Part I-A of the First Schedule remain unchanged:
Individuals & HUFs (Below 60 Years)
- Up to Rs 2.5 lakh - Nil
- Rs 2.5 lakh to Rs 5 lakh - 5%
- Rs 5 lakh to Rs 10 lakh - 20%
- Above Rs 10 lakh - 30%
Senior Citizens (60- 80 Years)
- Up to Rs 3 lakh - Nil
- Rs 3 lakh to Rs 5 lakh - 5%
- Rs 5 lakh to Rs 10 lakh - 20%
- Above Rs 10 lakh - 30%
Super Senior Citizens (80+ Years)
- Up to Rs 5 lakh - Nil
- Rs 5 lakh to Rs 10 lakh - 20%
- Above Rs 10 lakh - 30%
Tax Rates for Other Entities
Co-operative Societies: Slab rates of 10%, 20%, and 30% remain unchanged.
Firms & Local Authorities: Flat tax rate of 30% continues.
Companies:
- Domestic companies: 25% (subject to turnover limits) or 30%
- Optional concessional regimes at 22% or 15% remain available
- Foreign companies: 35%
Surcharge, Marginal Relief & Health and Education Cess
- Surcharge rates remain the same as FY 2025-26.
- For individuals under the new regime, the maximum surcharge continues to be capped at 25%, excluding certain capital gains and dividend income where a 15% cap applies.
- Marginal relief will continue to be available wherever a surcharge applies.
- Health and Education Cess will be levied at 4% on income tax plus surcharge, with no marginal relief on cess.
Key Takeaway
The Finance Bill, 2026, signals tax rate certainty and continuity, with no increase or restructuring of income-tax slabs or rates for FY 2026- 27. The move is expected to provide predictability to taxpayers while allowing the government to focus on administrative and compliance reforms rather than rate changes.
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