Income Tax & Surcharge Rates for FY 2025-26 (AY 2026-27)
Income Tax & Surcharge Rates for FY 2025-26 (AY 2026-27) Income tax planning requires a clear understanding of applicable tax rates, surcharge slabs, and rebates. For FY 2025-26 (AY 2026-27), taxpayers can choose between the old regime with exemptions and deductions, or the new regime with simplified slabs and higher exemption limits. Below is a comprehensive guide to tax rates for individuals, firms, LLPs, and companies, along with surcharge applicability and rebates. Tax Rates for Individuals, HUFs, AOPs, BOIs Old Regime The taxpayer has to exercise the option under section 115BAC(6) to avail the benefit of old tax regime. The normal tax rates applicable to a resident individual will depend on the age of the individual. However, in case of a non-resident individual the tax rates will be same irrespective of his age. For the purpose of ascertainment of the applicable tax slab, an individual can be classified as follows: Resident individual below the age of 60 years Resident individual of the age of 60 years or above at any time during the year but below the age of 80 years Resident individual of the age of 80 years or above at any time during the year Non-resident individual irrespective of the age. Category Income Range Tax Rate Individuals (<60 years) & Non-residents Up to ₹2,50,000 Nil ₹2,50,001 – ₹5,00,000 5% ₹5,00,001 – ₹10,00,000 20% Above ₹10,00,000 30% Senior Citizens (60–79 years) Up to ₹3,00,000 Nil ₹3,00,001 – ₹5,00,000 5% ₹5,00,001 – ₹10,00,000 20% Above ₹10,00,000 30% Super Senior Citizens (80+ years) Up to ₹5,00,000 Nil ₹5,00,001 – ₹10,00,000 20% Above ₹10,00,000 30% New Regime u/s 115BAC (Default) Income Range 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% Rebate under Section 87A Old Regime: Rebate up to ₹12,500 if income ≤ ₹5,00,000. New Regime (AY 2026-27): Rebate up to ₹60,000 if income ≤ ₹12,00,000, with marginal relief if income slightly exceeds ₹12,00,000. Surcharge Rates for Individuals Total Income Range Old Regime Surcharge New Regime Surcharge ₹50 lakh – ₹1 crore 10% 10% ₹1 crore – ₹2 crore 15% 15% ₹2 crore – ₹5 crore 25% 25% Above ₹5 crore 37% 25% Notes: Maximum surcharge on dividend income and capital gains under sections 111A, 112, 112A, and 115AD is capped at 15%. Marginal relief is available at each threshold to prevent excessive tax burden. Health & Education Cess 4% on income tax plus surcharge. Tax Rates for Firms & LLPs Entity Tax Rate Surcharge Cess Partnership Firm / LLP 30% 12% if income > ₹1 crore 4% on tax + surcharge Tax Rates for Companies Domestic Companies Category Tax Rate Surcharge Rate Health & Education Cess Turnover ≤ ₹400 crore (FY 2023-24) 25% 7% if income > ₹1 crore but upto ₹ 10 crores 12% if income > ₹10 crores 4% on tax + surcharge Other domestic companies 30% 7% if income > ₹1 crore but upto ₹ 10 crores 12% if income > ₹10 crores 4% on tax + surcharge Special Tax Regimes Section Tax Rate Surcharge Health & Education Cess 115BA 25% Income 1CR to 10 CR- 7% Income above 10 CR- 12% 4% on tax + surcharge 115BAA 22% Flat 10% 4% on tax + surcharge 115BAB 15% Flat 10% 4% on tax + surcharge Foreign Companies Category Tax Rate Surcharge Health & Education Cess All foreign companies 35% Income 1CR to 10 CR- 2% Income above 10 CR- 5% 4% on tax + surcharge Tax Planning Tips – AY 2026-27 Compare old vs. new regime before filing to choose the most tax-efficient option. Maximize deductions under 80C, 80D, and housing loan interest if opting for the old regime. Time capital gains to benefit from lower tax rates. Ensure advance tax payments are made on time to avoid interest under sections 234B/234C. Verify Form 26AS and AIS for TDS credits to prevent mismatches at filing. Companies can evaluate concessional regimes under sections 115BAA (22%) or 115BAB (15%). Maintain proper documentation for deductions, exemptions, and investments to ensure smooth compliance. Conclusion For AY 2026-27, the new regime is the default option, offering higher exemption limits and a generous rebate under section 87A. The old regime continues to benefit taxpayers who claim deductions and exemptions. Firms and companies face flat tax rates with surcharges based on income thresholds. BLOG BY – MITTAL & CO.