Income-tax rates for 2026-27 remain unchanged across specified sections and Part I-B of the First Schedule. Income-tax rates for the tax year 2026-27 remain unchanged: rate provisions in the Act for domestic companies, individuals/HUFs/AOPs/BOIs/AJPs and cooperative societies and the rates set out in Part I-B of the First Schedule to the Bill are not amended and the existing rate structures continue to apply.
Tax rates under section 202 set default slabs with surcharge bands, surcharge caps for specified cases, and marginal relief. Tax rates under section 202 set graded default income-tax slabs for specified taxpayers for 2026-27, subject to an option to elect an alternative regime; a surcharge applies to higher total income bands (with inclusion rules for dividend income and capital gains), surcharge caps where alternative provisions apply and for certain associations of persons, and marginal relief to alleviate threshold impacts.
Income-tax 2026-27: new slab rates, optional Part I-B age-based slabs, and revised surcharge caps and relief. Section 202 prescribes progressive income-tax slabs for 2026-27 for individuals, HUFs, AOPs, BOIs and specified artificial juridical persons, while preserving an option under section 202(4) to adopt the Part I-B rates. Part I-B provides alternative slabs including age-based thresholds for senior and super senior residents. Computed tax (including specified dividend and capital gains) attracts a graduated surcharge with provisos capping surcharge on dividend/capital gains at 15%, limiting surcharge for company-only AOPs to 15%, and reducing the 37% surcharge to 25% for persons taxed under section 202; marginal relief applies.
Co-operative societies: unchanged tax rates, tiered surcharge with marginal relief, and optional lower-rate tax regime with reduced surcharge. Co-operative societies are taxed under Paragraph B of Part I B of the First Schedule with rates unchanged from the prior year. Surcharge applies in tiers according to total income, with marginal relief available to reduce surcharge impact where appropriate. A resident co-operative society that satisfies prescribed conditions may elect an alternative lower-rate tax regime; when elected, a specified lower surcharge percentage applies to that tax.
Firms: income-tax rate unchanged; 12% surcharge over one crore rupees with a cap limiting additional tax. Firms continue to pay the same specified rate of income-tax as in the prior year. A 12% surcharge applies where a firm's total income exceeds one crore rupees, but the total tax plus surcharge on income exceeding one crore rupees is limited so it does not exceed the tax on one crore rupees by more than the excess income.
Local authorities face the same income-tax rate with a 12% surcharge above one crore, subject to a cap. Local authorities remain subject to the same income-tax rate as specified in Paragraph D of Part I-B of the First Schedule; a 12% surcharge on such income-tax applies where total income exceeds one crore rupees, but the combined income-tax and surcharge on income above one crore is limited so it does not exceed the income-tax on one crore rupees by more than the excess amount.
Company tax rates: domestic companies 25% or 30% with opt-in 22% regime; non-domestic companies 35%; specified surcharges apply. The Finance Bill, 2026 sets company tax rates: domestic companies pay 25% if turnover/gross receipts for 2024-25 400 crore and under section 199, otherwise 30%; domestic companies may opt for section 200 at 22% with a 10% surcharge. Non-domestic companies are taxed at 35% on income not at special rates. Surcharges: domestic (excluding section 200/201 electors) 7% for income >1 crore 10 crore and 12% for income >10 crore; non-domestic 2% for >1 crore 10 crore and 5% for >10 crore. Marginal relief applies.
Surcharge on income-tax stays unchanged; specified fund income exempt and special-assessment persons face a 25% surcharge cap. Surcharge rates remain unchanged from the prior assessment year. Surcharge does not apply to income-tax computed on income of a specified fund as noted in the tax schedule. For persons assessed under the special assessment procedure, the higher surcharge tier on income above the high-income threshold (excluding dividend income and capital gains) is not applied and the surcharge is restricted to 25%.
Union Budget 2026-27: marginal relief applies where surcharge is imposed for affected taxpayers to mitigate additional tax burden. The Finance Bill for the Union Budget 2026-27 provides marginal relief in all cases where a surcharge is proposed to be imposed, as a mitigation mechanism to prevent disproportionate increases in tax liability when surcharge thresholds are crossed and to preserve intended tax progression.
Health and Education Cess to be levied at 4% on income-tax inclusive of surcharge; no marginal relief. Health and Education Cess is imposed at 4% on the amount of income-tax so computed, inclusive of any applicable surcharge, and no marginal relief is available; the cess is levied uniformly on the surcharge-inclusive tax liability.
Rates for tax deduction at source for FY 2026-27 remain unchanged; 4% health and education cess applies to nonresidents. Rates for deduction of income-tax at source from incomes other than salaries are specified in Part II of the First Schedule to the Finance Bill and are to be applied under the relevant sections of the Act. The rates and the Union surcharge remain the same as in the prior year, and a Health and Education Cess of 4% on income-tax including surcharge continues to apply to nonresidents and foreign companies.
Union Budget 2026 27 sets new income tax and advance tax rates for individuals, senior citizen thresholds, and graduated surcharge bands. Part III of the First Schedule sets FY 2026 27 tax deduction and advance tax rates: Section 202 rates use a seven bracket scale to 30% (above Rs. 24,00,000) with an option to adopt Part III rates. Paragraph A offers a four slab regime for individuals and similar entities with adjusted thresholds for senior citizens; capital gains under specified sections are included. Surcharge bands of 10%, 15%, 25% and 37% apply by income band, subject to caps and special restrictions for dividend/capital gains, associations of companies and persons taxed under section 202. Marginal relief is provided.
Co-operative societies: existing tax rates unchanged; 7% and 12% surcharges apply with marginal relief; 22% option available. In respect of co-operative societies, income-tax rates remain unchanged from FY 2025-26. A 7% surcharge on income-tax applies where total income exceeds one crore but does not exceed ten crore rupees, and a 12% surcharge applies where total income exceeds ten crore rupees; marginal relief is provided. A resident co-operative society that satisfies certain conditions may opt to pay tax at 22% under the Act, with a 10% surcharge on such tax.
Firms: tax rate unchanged; 12% surcharge applies above one crore rupees with a cap on excess liability. For FY 2026-27, firms are taxed at the Paragraph C rate in Part III of the First Schedule (unchanged from FY 2025-26) and face a 12% surcharge where total income exceeds one crore rupees; however, the aggregate tax plus surcharge on income above one crore is capped so it does not exceed the tax on one crore by more than the excess income amount.
Local authorities face a 12% surcharge on income-tax for total income exceeding one crore, subject to a cap. The rate of income-tax for every local authority is specified in Paragraph D of Part III and remains unchanged; a surcharge at the rate of 12% applies where total income exceeds one crore rupees, and the combined tax and surcharge on income above one crore is capped so it does not exceed the tax on one crore rupees by more than the excess amount.
Corporate tax rates updated for FY 2026-27, including surcharge tiers and health and education cess. Union Budget 2026-27 sets company income-tax rates and related surcharge and cess treatment for FY 2026-27: domestic companies pay 25% if turnover/gross receipts for tax year 2024-25 are four hundred crore and under the section 199 regime, otherwise 30%, with an option to opt for 22% under section 200 (10% surcharge on that tax). Non domestic companies are taxed at 35% on ordinary income. Surcharge tiers and marginal relief rules remain, and a 4% Health and Education Cess applies on tax inclusive of surcharge without marginal relief for the cess.
Employer deduction for employee contributions will be tied to the return filing due date under section 263(1). The Finance Bill, 2026 amends section 29(1)(e) to provide that the due date for claiming a deduction for employee contributions credited by the employer shall be the due date of filing of return of income under section 263(1); the amendment takes effect from 1 April 2026 and applies to tax year 2026-27 and subsequent years.
Interest income under Motor Vehicles Act now exempt for individuals and legal heirs from FY 2026-27 onward. Interest payable as part of compensation under the Motor Vehicles Act, 1988 to an individual or the legal heir for death, permanent disability, or bodily injury is proposed to be exempt by addition to the Income-tax Act Schedule; the amendment is effective from 1 April 2026 and applies to the tax year commencing then and subsequent years.
Interest on compensation from Motor Accidents Claims Tribunal: no tax deducted at source for individuals, effective April 2026. The Finance Bill, 2026 proposes that no tax shall be deducted at source on interest paid on compensation awarded by the Motor Accidents Claims Tribunal to an individual, removing the prior conditional threshold and providing relief to accident victims. The amendment is effective from 1 April 2026 (Clause 72).
Electronic TDS/TCS certificates: payees may file for lower or nil deduction; authority may issue or reject applications. Permits payees to file applications electronically for certificates for deduction of income-tax at lower or nil rates before the prescribed income-tax authority, which may issue the certificate subject to prescribed conditions or reject incomplete or non compliant applications, thereby easing compliance burdens for small taxpayers under Section 395.
Income Tax Rates - For the Assessment Year 2018-19 and Rates for deduction of tax at source from "Salaries", computation of "advance tax" and charging of income-tax in special cases during the financial year 2017-2018 - Budget 2017-18
2 February, 2017
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Income-tax rate structure revised for salaries, advance tax and special cases with senior citizen slabs and surcharge. Part III of the First Schedule to the Finance Bill, 2017 prescribes the income-tax rates for deduction at source from salaries, advance tax computation ... Summary
Income-tax rate structure revised for salaries, advance tax and special cases with senior citizen slabs and surcharge.
Part III of the First Schedule to the Finance Bill, 2017 prescribes the income-tax rates for deduction at source from salaries, advance tax computation and charging of income-tax in special cases for financial year 2017-2018. Tiered progressive rates apply to individuals, HUFs, AOPs, BOIs and specified artificial juridical persons. Distinct nil-tax thresholds and slab treatment are provided for resident individuals aged sixty to less than eighty and for those aged eighty or more. A surcharge of ten per cent applies within a defined high-income range and fifteen per cent above the higher threshold, with marginal relief available.
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