The Union Budget 2026 kept the income tax slabs unchanged for both the old and new tax regimes, continuing the structure introduced in Budget 2025 for Financial Year 2026-27 (Assessment Year 2027-28). For salaried employees in Dehradun weighing which regime to choose, here is a clear breakdown, along with worked examples to show what it actually means for your take-home pay.
A standard deduction of ₹75,000 continues to be available to salaried individuals and pensioners under the new regime, reducing your taxable income before these slabs even apply.
Under the new regime, resident individuals with taxable income up to ₹12,00,000 can claim a rebate under Section 87A of up to ₹60,000, which effectively wipes out the tax liability entirely at that income level. Under the old regime, the equivalent rebate applies only up to a taxable income of ₹5,00,000, with a maximum rebate of ₹12,500 — a significant difference that tilts the comparison in favour of the new regime for many salaried taxpayers.
Consider a salaried employee with a gross salary of ₹12,75,000 for FY 2026-27, opting for the new regime. After the ₹75,000 standard deduction, taxable income works out to ₹12,00,000. Applying the slabs above gives a tax of ₹60,000 before rebate — and since taxable income does not exceed ₹12,00,000, the full Section 87A rebate applies, bringing the final tax liability down to nil.
Now compare a slightly higher earner, with a gross salary of ₹18,00,000. After the standard deduction, taxable income is ₹17,25,000, which crosses the ₹12,00,000 rebate threshold. Tax works out to roughly ₹1,45,000 before cess — illustrating how the rebate cliff at ₹12 lakh taxable income makes a meaningful difference just above the threshold, and why salary structuring and eligible deductions still matter even under the new regime.
The new regime remains the default option, but taxpayers can still opt for the old regime if it works out better for them — typically when they claim substantial deductions such as HRA, Section 80C investments, home loan interest under Section 24(b), or medical insurance premiums under Section 80D. The right choice depends entirely on your individual mix of income, investments, and deductions, and it is worth running the comparison every year rather than assuming last year’s choice still applies.
With the slab structure now stable for a second year running, it is a good time to review your salary structure, investment declarations, and any planned big-ticket deductions with your CA well before the financial year progresses too far, rather than scrambling in the final quarter. If your income sits close to the ₹12 lakh taxable income mark, even small adjustments — such as timing a bonus or restructuring a portion of your salary into tax-exempt allowances — can have an outsized effect on your final tax bill.
Our team helps salaried professionals in Dehradun compare both regimes against their actual numbers, structure salary components tax-efficiently, and plan investments that genuinely reduce their tax outgo. Get in touch with us to work out which regime suits you best for FY 2026-27.
This article is intended as general guidance based on provisions announced in the Union Budget 2026. Please consult our team for advice specific to your income and circumstances.