Tax on ₹10 Lakh Income in FY 2026-27: New vs Old Regime Calculation
Great news: if your annual salary is ₹10 lakh, you can pay ZERO income tax in FY 2026-27 under the new tax regime – thanks to the enhanced Section 87A rebate introduced in Budget 2025. But to unlock this benefit, you need to choose the right regime and understand how the calculation works. This guide breaks it all down with exact numbers.
✅ Tax on ₹10 Lakh Income – FY 2026-27 Quick Answer
- New Tax Regime (salaried): ₹0 tax (after ₹75,000 standard deduction + 87A rebate)
- Old Tax Regime (with max deductions): ~₹75,400 tax
- Recommendation: New regime is clearly better for ₹10 lakh income
FY 2026-27 Tax Slabs: New Tax Regime
The new tax regime (default from FY 2023-24 onwards) has the following slabs for FY 2026-27 – no change from last year:
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | NIL |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Key benefits under new regime: Standard deduction of ₹75,000 for salaried individuals + Section 87A rebate of up to ₹60,000 if total taxable income ≤ ₹12 lakh (making income up to ₹12.75 lakh effectively tax-free for salaried).
Tax Calculation on ₹10 Lakh Salary – New Tax Regime FY 2026-27
| Step | Amount |
|---|---|
| Gross Annual Salary | ₹10,00,000 |
| Less: Standard Deduction | – ₹75,000 |
| Net Taxable Income | ₹9,25,000 |
| Tax on ₹4 lakh @0% | ₹0 |
| Tax on next ₹4 lakh @5% | ₹20,000 |
| Tax on remaining ₹1.25 lakh @10% | ₹12,500 |
| Total Tax Before Rebate | ₹32,500 |
| Less: Section 87A Rebate (income ≤ ₹12L) | – ₹32,500 |
| Tax After Rebate | ₹0 |
| Health & Education Cess @4% | ₹0 |
| TOTAL TAX PAYABLE | ₹0 🎉 |
Tax Calculation on ₹10 Lakh Salary – Old Tax Regime FY 2026-27
Old regime slabs remain unchanged: Up to ₹2.5L (0%), ₹2.5L-₹5L (5%), ₹5L-₹10L (20%), above ₹10L (30%).
| Step | Amount |
|---|---|
| Gross Annual Salary | ₹10,00,000 |
| Less: Standard Deduction | – ₹50,000 |
| Less: Section 80C (max) | – ₹1,50,000 |
| Net Taxable Income | ₹8,00,000 |
| Tax on ₹2.5L @0% | ₹0 |
| Tax on ₹2.5L @5% | ₹12,500 |
| Tax on ₹3L @20% | ₹60,000 |
| Tax Before Cess | ₹72,500 |
| Health & Education Cess @4% | ₹2,900 |
| TOTAL TAX PAYABLE | ₹75,400 |
New Regime vs Old Regime for ₹10 Lakh – Which is Better?
| Parameter | New Regime | Old Regime |
|---|---|---|
| Standard Deduction | ₹75,000 | ₹50,000 |
| 80C Deduction | Not available | Up to ₹1.5L |
| 87A Rebate | Up to ₹60,000 (if income ≤ ₹12L) | ₹12,500 (if income ≤ ₹5L) |
| Tax on ₹10L Gross Salary | ₹0 | ₹75,400 |
| Verdict | ✅ Winner | ❌ Higher tax |
Conclusion: For a salaried person with ₹10 lakh gross income, the new tax regime saves ₹75,400 compared to the old regime in FY 2026-27. Even if you have significant 80C investments, the new regime wins at this income level.
How to Reduce Tax on ₹10 Lakh Income (Old Regime)
If you still prefer the old regime (e.g., for HRA benefit, home loan deduction), here’s how to maximise deductions:
- Section 80C (₹1.5 lakh): ELSS, PPF, EPF, LIC premium, ULIP, NSC, 5-year FD, tuition fees
- Section 80D (₹25,000 + ₹50,000 for parents): Health insurance premiums
- HRA exemption: If you live in rented accommodation and receive HRA from employer
- Section 24(b): Up to ₹2 lakh interest deduction on home loan (self-occupied property)
- Section 80CCD(1B): Additional ₹50,000 for NPS contribution over and above 80C
- LTA exemption: Leave Travel Allowance (available for 2 trips in 4-year block)
₹10 Lakh Tax: Special Income Scenarios
₹10 Lakh from Capital Gains
If part of your ₹10 lakh income is from capital gains, tax treatment differs:
- Short-Term Capital Gains (STCG) on equity/mutual funds: Taxed at 20% flat (Section 111A, effective FY 2024-25 onwards)
- Long-Term Capital Gains (LTCG) on equity/MF: Gains above ₹1.25 lakh taxed at 12.5% flat (Section 112A)
- LTCG on property: 20% with indexation benefit (or as per new rules from Budget 2024)
₹10 Lakh from Business/Freelancing
Business income is computed after deducting all business expenses. If your net profit is ₹10 lakh, the same new regime slabs apply and zero tax is payable (after standard deduction and 87A rebate, if eligible).
FAQs – Tax on ₹10 Lakh Income FY 2026-27
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