The Finance Minister has announced significant changes to the income tax slabs for the Assessment Year (AY) 2026-27, aiming to provide relief to taxpayers and stimulate economic growth. Here’s a detailed overview of the new tax structure:
New Tax Regime Slabs for Individual and HUF for AY 2026-27:
| Annual Income Range | Tax Rate |
| 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% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
How much can you keep after claiming exemptions and deductions:
- Standard Deduction u/s 16 (ia) upto Rs. 75,000 on salary income only.
- Employer’s NPS contribution up to 14% of salary (Basic + DA) u/s 80CCD (2).
Basically, an employee can take the benefits of Rs. 75,000 plus 14% of (Basic + DA) as a deduction and exemption addition to the New Tax Slab benefits for PY 2025-26 (AY 2026-27).
For Example: Say Employee is earning salary of Rs. 13,50,000 and (Basic salary is Rs. 5,40,000 included in Rs. 13,50,000).
| Particulars | Taxable Income |
| Total Income | 13,50,000.00 |
| Standard Deduction | (75,000.00) |
| Gross Income | 12,75,000.00 |
| Deduction U/s 80CCD (14% of 5,40,000) | (75,600.00) |
| Taxable Income | 11,99,400.00 |
| Tax Payable | Nil |
Section 80CCD is a powerful tax-saving tool for salaried employees, especially those in high-income brackets or nearby slab. By ensuring that employers contribute to NPS, employees can maximize tax benefits while securing their financial future.
Conclusion: Always consult with a qualified tax professional to tailor these strategies to your personal financial situation and to stay compliant with the tax laws in India.