Budget 2026 Income Tax: No Tax Up to ₹8 Lakh Income
Finance Minister Nirmala Sitharaman presented the Union Budget 2026-27 today, bringing significant relief to the salaried class and middle-income tax payers.
In a move aimed at boosting disposable income and consumption, the government has overhauled the New Tax Regime, providing higher exemption limits and revised tax brackets.
Revised Slabs for 2026-27
The highlight of the 2026 Budget is the increase in the initial tax-free threshold.
Under the New Regime, no tax will be levied on income up to ₹4 lakh, an increase from the previous ₹3 lakh.
Additionally, the income limit for a full tax rebate under Section 87A has been raised, effectively ensuring that individuals earning up to ₹8 lakh annually pay zero income tax.
The new structure for the 2026-27 fiscal year is as follows:
- Up to ₹4,00,000: Nil
- ₹4,00,001 to ₹8,00,000: 5%
- ₹8,00,001 to ₹12,00,000: 10%
- ₹12,00,001 to ₹16,00,000: 15%
- ₹16,00,001 to ₹20,00,000: 20%
- ₹20 lakh to ₹24 lakh – 25%
- Above ₹24,00,000: 30%
Standard Deduction and Pensioner Benefits
To further support salaried employees, the government has hiked the Standard Deduction from ₹50,000 to ₹75,000.
For pensioners, the family pension deduction limit has been increased to ₹25,000.
Experts suggest that these combined changes will result in an annual saving of approximately ₹17,500 to ₹25,000 for most taxpayers in the middle-income bracket.
Focus on the New Tax Regime
The Finance Minister reiterated the government’s intent to make the New Regime the default and most attractive option.
While the Old Regime remains available, the government made no changes to its slabs or deductions.
The focus remains on a simplified, low-rate structure that eliminates the need for complex investment-based exemptions.
Corporate and Capital Gains Tax
Beyond personal income tax, the Budget introduced a simplified structure for Long-Term Capital Gains (LTCG).
The government has increased the exemption limit for LTCG on listed equities to ₹2 lakh per year, providing relief to small retail investors amidst a volatile market.
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