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.
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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.
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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.