The Finance Act 2025 carried forward several structural changes that apply for FY 2026-27. None are headline-grabbing on their own, but together they reshape the math for most salaried Indians.
1. New regime slabs widened
The first slab now extends to ₹4 lakh (from ₹3L), 5% applies up to ₹8L, 10% up to ₹12L, then 15%, 20%, 25%, and 30% in ₹4L bands up to ₹24L. Each slab boundary moved up — pushing more taxable income into lower bands.
2. Section 87A rebate at ₹12L
Taxable income up to ₹12 lakh under the new regime now pays zero tax (was ₹7L). With the ₹75K standard deduction, that effectively means salaried earners earning under ~₹12.75L gross pay no income tax at all.
3. LTCG rationalised at 12.5%
Effective 23 July 2024 (and continuing): long-term capital gains on listed equity and equity mutual funds are taxed at 12.5% (was 10%), with the exemption threshold raised from ₹1L to ₹1.25L per financial year. Short-term gains moved from 15% to 20%.
4. Indexation removed for property LTCG
Real estate LTCG is now 12.5% without indexation, OR 20% with indexation — taxpayers can choose. For long-held property bought before July 2024, indexation usually wins.
Use our Income Tax calculator and Capital Gains calculator to see the actual numbers for your situation.