Tax Rates | Surcharge | Cess for AY 2025-26 and 2026-27

Stay updated with the latest tax provisions for the assessment years 2025-26 and 2026-27. This guide covers essential information on income tax rates, surcharge, health and education cess, minimum alternate tax (MAT), and marginal relief across various taxpayer categories. Whether you're an individual, firm, or company, understanding these details will help you navigate the complexities of India's tax landscape with ease.

Table of Contents

1. Tax Rates
2. Surcharge on Income Tax
3. Health and Education Cess on Income Tax
4. Minimum Alternate Tax/Alternate Minimum Tax
5. Marginal Relief
6. Maximum Marginal Tax Rates
7. Rates for Tax Deduction/Collection at Source

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1. Tax Rates

Tax rates under the old tax regime for the assessment years 2025-26 and 2026-27 are given in Referencer 1. Tax rates under the new tax regime under section 115BA/115BAA/115BAB/115BAC/115BAD/115BAE are given in Referencer 3. New tax regime is optional [one has to exercise the option under section 115BA(4)/115BAA(5)/115BAB(7)/115BAD(5)/115BAE(5) to avail the benefit of new tax regime]. However, in the case of an individual/HUF/AOP/BOI/artificial juridical person, the new tax regime is the default tax regime [one has to exercise the option under section 115BAC(6) to avail the benefit of the old tax regime].

1.1 Income Tax

The following are income-tax rates for the assessment years 2025-26 and 2026-27 –

1.1.1 Individual/HUF/AOP/BOI/Artificial Juridicial Person

Tax rates pertaining to these assesses are as follows –

Old Tax Regime – Exemption limit is Rs. 2,50,000². A higher exemption limit is applicable in the case of a senior citizen or super senior citizen.

Senior Citizen – Senior citizen is a resident individual who is at least 60 years of age at any time during the previous year but less than 80 years on the last day of previous year [assessment year 2025-26 (date of birth – on or after April 2, 1945, but before April 2, 1965) or assessment year 2026-27 (date of birth – on or after April 2, 1946 but before April 2, 1966)].

In the case of a senior citizen, exemption limit is Rs. 3,00,000². Net income in the range of Rs. 3,00,000 to Rs. 5,00,000 is taxable at the rate of 5 per cent. Between Rs. 5,00,000 and Rs. 10,00,000, the slab rate is 20 per cent and the income exceeding Rs. 10,00,000 is taxable at the rate of 30 per cent. These rates are applicable only in the case of a resident (ordinarily or otherwise) senior citizen. In the case of a non-resident senior citizen, the exemption limit is Rs. 2,50,000 as given below.

Super Senior Citizen – A super senior citizen is a resident individual who is at least 80 years of age at any time during the previous year [assessment year 2025-26 (date of birth – before April 2, 1945) or assessment year 2026-27 (date of birth – before April 2, 1946)].

In the case of super senior citizen, first Rs. 5,00,000 of net income is exempt from tax. Net income in the range of Rs. 5,00,000 to Rs. 10,00,000 is taxable at the rate of 20 per cent. Net income exceeding Rs. 10,00,000 is taxable at the rate of 30 per cent. These rates are applicable only in the case of a resident (ordinarily or otherwise) super senior citizen. In the case of a non-resident, the exemption limit will be Rs. 2,50,000 as given below.

Any Other Individual, Any HUF/AOP/BOI – This category includes the following taxpayers –

1. 1. Any other resident individual [assessment year 2025-26 (date of birth – on or after April 2, 1965) or assessment year 2026-27 (date of birth – on or after April 2, 1966)].
2. Any non-resident individual irrespective of age.
3. Any HUF, AOP, BOI, artificial juridical person.

In the case of any of these assessees, first Rs. 2,50,000² of net income is exempt from tax. Net income in the range of Rs. 2,50,000 to Rs. 5,00,000 is taxable at the rate of 5 per cent. On net income between Rs. 5,00,000 and Rs. 10,00,000, the slab rate is 20 per cent and income exceeding Rs. 10,00,000 is taxable at the rate of 30 per cent.

New Tax Regime – For an individual/HUF/AOP/BOI/artificial juridical person, the new tax regime is the default tax regime. One can exercise the option under section 115BAC(6) to avail of the benefit of old tax regime. Tax rates under the new tax regime are as follows –

Section 115BAC(1A) For the Assessment Year 2025-26		Section 115BAC(1A) From the Assessment Year 2026-27
Total income	Rate of Tax	Total income	Rate of Tax
Up to Rs. 3,00,000	Nil	Up to Rs. 4,00,000	Nil
From Rs. 3,00,001 to Rs. 7,00,000	5%3	From Rs. 4,00,001 to Rs. 8,00,000	5%3
From Rs. 7,00,001 to Rs. 10,00,000	10%	From Rs. 8,00,001 to Rs. 12,00,000	10%3
From Rs. 10,00,001 to Rs. 12,00,000	15%	From Rs. 12,00,001 to Rs. 16,00,000	15%
From Rs. 12,00,001 to Rs. 15,00,000	20%	From Rs. 16,00,001 to Rs. 20,00,000	20%
Above Rs. 15,00,000	30%	From Rs. 20,00,001 to Rs. 24,00,000	25%
		Above Rs. 24,00,000	30%

1.1.2 Firm

There is no change in the tax rate. A partnership firm (including a limited liability partnership firm) is taxable at the rate of 30 per cent.

1.1.3 Company

A domestic company is taxable at the rate of 30 per cent. However, tax rate is 25 percent in the following cases –

1. A domestic company (where its total turnover or gross receipt in the previous year 2022-23 does not exceed Rs. 400 crore) is taxable at the rate of 25 per cent (not 30 per cent) for the assessment year 2025-26.
2. A domestic company (where its total turnover or gross receipt in the previous year 2023-24 does not exceed Rs. 400 crore) is taxable at the rate of 25 per cent (not 30 per cent) for the assessment year 2026-27.

A non-domestic company is taxable at the rate of 35 per cent.

• New Tax Regime for a Domestic Company – A domestic company can opt for the new tax regime provided under section 115BA or section 115BAA or section 115BAB.

1.1.4 Co-operative Society and Local Autority

In the case of a co-operative society/local authority, there is no change in the income-tax rates.

• New Tax Regime for a Resident Co-operative Society – A resident co-operative society can opt for the new tax regime provided under section 115BAD or section 115BAE.

2. Surcharge on Income Tax

Applicable surcharge (as a percentage of income tax) for the assessment years 2025-26 and 2026-27 is as follows^3a –

	Net Income Range	Surcharge as a % of Income Tax
Individuals/HUF/AOP/BOI/artificial juridical person	0 – Rs. 50 lakh	Nil
	Rs. 50 lakh – Rs. 1 crore	10%
	Rs. 1 crore – Rs. 2 crore	15%
	Rs. 2 crore – Rs. 5 crore	25%
	Above Rs. 5 crore	37%
Firm/local authority	0 – Rs. 1 crore	Nil
	Above Rs. 1 crore	12%
Co-operative society	0 – Rs. 1 crore	Nil
	Rs. 1 crore – Rs. 10 crore	7%
	Above Rs. 10 crore	12%
Domestic company	0 – Rs. 1 crore	Nil
	Rs. 1 crore – Rs. 10 crore	7%
	Above Rs. 10 crore	12%
Foreign company	0 – Rs. 1 crore	Nil
	Rs. 1 crore – Rs. 10 crore	2%
	Above Rs. 10 crore	5%

Note – The above surcharge is subject to a marginal relief

2.1 Surcharge When Individual/HUF/AOP, Etc., Has Dividend Income or Income Taxable Under Section 111A/112/112A

Surcharge for the assessment years 2025-26 and 2026-27 is as follows^3a –

Different Situations	Nature and Quantum of Income of the Assessee (i.e., individual, HUF, AOP, BOI or an Artificial Juridical Person)	Surcharge on Amount of Income Tax Computed on Dividend Income and Income Which is Taxable Under Section 111A/112/112A	Surcharge on Amount of Income Tax Computed on Other Incomes
Situation 1	Total income (including dividend income and income under section 111A/112/112A) does not exceed Rs. 50 lakh	Nil	Nil
Situation 2	Total income (including dividend income and income under section 111A/112/112A) exceeds Rs. 50 lakh but does not exceed Rs. 1 crore	10%	10%
Situation 3	Total income (including dividend income and income under section 111A/112/112A) exceeds Rs. 1 crore but does not exceed Rs. 2 crore	15%	15%
Situation 4	Total income (excluding dividend income and income under section 111A/112/112A) exceeds Rs. 2 crore but does not exceed Rs. 5 crore	15%	25%
Situation 5	Total income (excluding dividend income and income under section 111A/112/112A) exceeds Rs. 5 crore	15%	37%
Situation 6	Total income (including dividend income and income under section 111A/112/112A) exceeds Rs. 2 crore (but it is not covered by Situation 4 and Situation 5)	15%	15%

Where the total income includes any dividend income and/or income chargeable under section 111A/112/112A, the rate of surcharge on the amount of income tax computed on that part of income, shall not exceed 15 per cent. Moreover, in the case of an AOP (consisting of only companies as its members), the rate of surcharge on the amount of income tax shall not exceed 15 per cent. Further, in the case of an individual/HUF/AOP/BOI/artificial juridical person, surcharge (if tax is payable under the new tax regime) cannot exceed 25 per cent.

It has been clarified by CBDT that the derivatives (future and options) are not treated as capital assets and the income arising from the transfer of the derivatives is treated as business income and is liable for normal rate of tax (and such case will fall in the 4th column of the above table). However, in the case of Foreign Institutional Investors (FPI), the derivatives are treated as capital assets and the gains arising from the transfer of the same are treated as capital gains and are subject to a special rate of tax as per the provisions of section 115AD. Consequently, surcharge on income tax payable on gains arising from the transfer of derivatives (future and options) by FPI which are liable to special rate of tax under section 115AD, cannot exceed 15 per cent (it will fall under 3rd column of the aforesaid table).

2.2 Surcharge When a Domestic Company Pays Tax Under Section 115BAA or Section 115BAB

In the case of a domestic company which has opted for the new tax regime under section 115BAA or 115BAB, surcharge is 10 per cent of income-tax (regardless of quantum of income).

2.3 Surcharge When a Resident Co-Operative Society Pays Tax Under Section 115BAD/115BAE

In the case of a resident co-operative society which has opted for the new tax regime under section 115BAD or section 115BAE, surcharge is 10 per cent of income-tax (regardless of quantum of income).

3. Health and Education Cess on Income Tax

For the assessment years 2025-26 and 2026-27, health and education cess (HEC) is 4 per cent of income-tax and surcharge^3a.

4. Minimum Alternate Tax/Alternate Minimum Tax

A corporate-assessee is covered by minimum alternate tax under section 115JB. A non-corporate assessee is covered by alternate minimum tax under section 115JC. However, minimum alternate tax/alternate minimum tax is not applicable if tax is payable under the new tax regime under section 115BAA/115BAB/115BAC/115BAD/115BAE.

• Tax Rate – The basic rate for minimum alternate tax is 15 per cent and alternate minimum tax is 18.5 per cent (15 per cent for co-operative society) for the assessment years 2025-26 and 2026-27. If a unit is in International Financial Services Centre⁴ and derives its income solely in convertible foreign exchange, the minimum alternate tax/alternate minimum tax is 9 per cent of book profit.
• Surcharge – Surcharge on minimum alternate tax/alternate minimum tax is as follows –

Adjusted Total Income/Book Profit Range	Individuals/HUF/AOP/BOI/Artificial Juridical Person	Firm/Local Authority	Co-operative Society	Domestic Company	Foreign Company
0 – Rs. 50 lakh	Nil	Nil	Nil	Nil	Nil
Rs. 50 lakh – Rs. 1 crore	10%	Nil	Nil	Nil	Nil
Rs. 1 crore – Rs. 2 crore	15%	12%	7%	7%	2%
Rs. 2 crore – Rs. 5 crore	25%	12%	7%	7%	2%
Rs. 5 crore – Rs. 10 crore	37%	12%	7%	7%	2%
Above Rs. 10 crore	37%	12%	12%	12%	5%

Notes –

1. Surcharge (given above) is subject to marginal relief.
2. In the case of an AOP (having only companies as its members), surcharge cannot exceed 15%.

• HEC – HEC is 4 per cent of minimum alternate tax/alternate minimum tax and surcharge.

5. Marginal Relief

The provisions pertaining to marginal relief are given below –

Individual/HUF/AOP/Artificial Juridical Person Having Income Above Rs. 50 Lakh – In the case of these taxpayers, if the income is slightly higher than Rs. 50 lakh, a provision has been made to provide relief in marginal cases. The said relief is as follows –

If the net income exceeds Rs. 50 lakh, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a net income of Rs. 50 lakh by more than the amount of income that exceeds Rs. 50 lakh.

Individual/HUF/AOP/Artificial Juridical Person Having Income Between Rs. 1 Crore and Rs. 2 Crore – In the case of these taxpayers, if income exceeds Rs. 1 crore but does not exceed Rs. 2 crore, the applicable surcharge will increase from 10 per cent to 15 per cent. Marginal relief is provided when net income is slightly higher than Rs. 1 crore which is as given below –

If the net income of these taxpayers exceeds Rs. 1 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on net income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

Individual/HUF/AOP/Artificial Juridical Person Having Income Between Rs. 2 Crore and Rs. 5 Crore – In the case of these taxpayers, if income exceeds Rs. 2 crore but does not exceed Rs. 5 crore, the applicable surcharge will increase from 15 per cent to 25 per cent. Marginal relief is provided when net income is slightly higher than Rs. 2 crore which is as given below –

If the net income of these taxpayers exceeds Rs. 2 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on net income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore.

Individual/HUF/AOP/Artificial Juridical Person Having Income Exceeding Rs. 5 Crore – In the case of these taxpayers, if income is more than Rs. 5 crore, the applicable surcharge will increase from 25 per cent to 37 per cent which is subject to marginal relief as follows –

If the net income of these taxpayers exceeds Rs. 5 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on net income of Rs. 5 crore by more than the amount of income that exceeds Rs. 5 crore.

Firms/Local Authorities Having Income Above ₹1 Crore – To avoid hardship, in the case of these taxpayers (having income of above Rs. 1 crore), a provision has been made to provide relief in marginal cases. The said relief is as follows –

If the net income exceeds Rs. 1 crore, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax on a net income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

Domestic Company/Foreign Company/Co-Operative Society Having Income Above ₹1 Crore – In the case of a company/co-operative society, surcharge is not applicable if net income does not exceed Rs. 1 crore. If net income exceeds Rs. 1 crore, surcharge is applicable.

To avoid hardship, in the case of a company/co-operative society whose income is slightly higher than Rs. 1 crore, a provision has been made to provide relief in marginal cases. The said relief is as follows –

If the net income exceeds Rs. 1 crore, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax on a net income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

Domestic Company/Foreign Company/Co-Operative Society Having Income Above ₹10 Crore – In the case of a company/co-operative society, if net income is more than Rs. 10 crore, the applicable surcharge will increase from 7 per cent to 12 per cent (in the case of foreign company, it increases from 2 per cent to 5 per cent). Consequently, another marginal relief is provided when net income is slightly higher than Rs. 10 crore which is as given below –

If the net income of a company/co-operative society exceeds Rs. 10 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on net income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore.

5.1 Income Range When Marginal Relief is Applicable

Marginal relief will be applicable in case net income falls in the following range for the assessment years 2025-26 and 2026-27 –

Old Tax Regime
	Income Range to Attract Marginal Relief	Page No. of Tax Table
Resident senior citizen	Rs. 50 lakh – Rs. 51.9552 lakh	B-6
	Rs. 100 lakh – Rs. 102.145 lakh	B-8
	Rs. 200 lakh – Rs. 209.296 lakh	B-10
	Rs. 500 lakh – Rs. 530.173 lakh	–
Resident super senior citizen	Rs. 50 lakh – Rs. 51.9402 lakh	B-6
	Rs. 100 lakh – Rs. 102.1374 lakh	B-8
	Rs. 200 lakh – Rs. 209.28 lakh	B-10
	Rs. 500 lakh – Rs. 530.1528 lakh	–
Any other resident individual, any non-resident individual, any HUF or any AOP/BOI/artificial juridical person	Rs. 50 lakh – Rs. 51.9589 lakh	B-6
	Rs. 100 lakh – Rs. 102.1469 lakh	B-8
	Rs. 200 lakh – Rs. 209.30 lakh	B-10
	Rs. 500 lakh – Rs. 530.1782 lakh	–
Firm	Rs. 100 lakh – Rs. 105.4216 Lakh	B-34
Domestic company (tax rate: 25%)	Rs. 100 lakh – Rs. 102.389 lakh	B-37
	Rs. 1000 lakh – Rs. 1017.3611 lakh	B-39
Domestic company (tax rate: 30%)	Rs. 100 lakh – Rs. 103.0927 lakh	B-37
	Rs. 1000 lakh – Rs. 1022.59030 lakh	B-39
New Tax Regime
Individual, HUF, AOP, BOI or artificial juridical person (assessment year 2025-26)	Rs. 50 lakh – Rs. 51.776 lakh	B-17
	Rs. 100 lakh – Rs. 102.05 lakh	B-19
	Rs. 200 lakh – Rs. 209.10 lakh	B-21
Individual, HUF, AOP, BOI or artificial juridical person (assessment year 2026-27)	Rs. 50 lakh – Rs. 51.61 lakh	B-27
	Rs. 100 lakh – Rs. 101.969 lakh	B-29
	Rs. 200 lakh – Rs. 208.93 lakh	B-31

Note: The above net income ranges will remain valid only if the assessee does not have any income which is chargeable to tax at special rate(s) of tax (e.g., long-term capital gains under section 112/112A, short-term capital gains under section 111A, lottery income, etc.).

In the case of alternate minimum tax/minimum alternate tax, the marginal relief will be applicable in case adjusted total income/book profit falls in the following range for the assessment years 2025-26 and 2026-27 –

	Income Range
Individual/HUF/AOP/BOI/artificial juridical person	Rs. 50 lakh – Rs. 51.16133 lakh
	Rs. 100 lakh – Rs. 101.174976 lakh
	Rs. 200 lakh – Rs. 204.813 lakh
	Rs. 500 lakh – Rs. 514.8684 lakh
Co-operative society/firm/local authority	Rs. 100 lakh – Rs. 102.8002 lakh
Domestic company	Rs. 100 lakh – Rs. 101.2507 lakh
	Rs. 1000 lakh – Rs. 1009.0144 lakh
Foreign company	Rs. 100 lakh – Rs. 100.35419 lakh
	Rs. 1000 lakh – Rs. 1005.3412 lakh

6. Maximum Marginal Tax Rates

Maximum marginal tax rates (at highest level) for the assessment years 2025-26 and 2026-27 are given in the table below –

Individual/HUF/BOI/AOP/artificial juridical person (new tax regime)	39%
Individual/HUF/BOI/AOP/artificial juridical person (old tax regime)	42.744%
Firm (including limited liability partnership)	34.944%
Co-operative society	34.944%
Domestic company	29.12%, 34.944%
Foreign company	38.22%

7. Rates for Tax Deduction/Collection at Source

During the financial year 2025-26, tax will be deducted at source under section 192/194P at the rate.

7.1 Surcharge, Education Cess, etc.., in the Case of TDS/TCS

For the financial year 2025-26, these rates are as follows –

TDS/TCS	Nature of Payment	Recipient/Collectee	Whether Health and Education Cess @ 4% Applicable	Whether Surcharge Applicable
TDS	Salary (or payment covered by section 194P)	Resident/non-resident	Yes	Yes	Note 1
TDS	Other than above	Resident	No	No
TDS	Other than above	Non-resident/foreign company	Yes	Yes	Note 2
TCS	Any	Resident	No	No
TCS	Any	Non-resident/foreign company	Yes	Yes	Note 3

Notes –

1. If the amount subject to TDS exceeds Rs. 50 lakh but does not exceed Rs. 1 crore, surcharge is 10 per cent of TDS. If it exceeds Rs. 1 crore but does not exceed Rs. 2 crore, surcharge is 15 per cent of TDS. If it exceeds Rs. 2 crore but does not exceed Rs. 5 crore, surcharge is 25 per cent of TDS. If it exceeds Rs. 5 crore, surcharge is 37 per cent (25 per cent under new tax regime) of TDS.
2. If the recipient is a non-resident (individual/HUF/AOP/artificial juridical person) and the payment/credit subject to TDS exceeds Rs. 50 lakh but does not exceed Rs. 1 crore, surcharge is 10 per cent of TDS. If it exceeds Rs. 1 crore but does not exceed Rs. 2 crore, surcharge is 15 per cent of TDS. If it exceeds Rs. 2 crore but does not exceed Rs. 5 crore, surcharge is 25 per cent of TDS. If it exceeds Rs. 5 crore, surcharge is 37 per cent (25 per cent under new tax regime) of TDS. If the recipient is a non-resident firm and the payment/credit subject to TDS exceeds Rs. 1 crore, surcharge is 12 per cent of TDS. If the recipient is a non-resident co-operative society and the payment subject to TDS exceeds Rs. 1 crore but does not exceed Rs. 10 crore, surcharge is 7 per cent of TDS (it is 12 per cent of TDS if the payment/credit exceeds Rs. 10 crore). If the recipient is a foreign company and the payment subject to TDS exceeds Rs. 1 crore but does not exceed Rs. 10 crore, surcharge is 2 per cent of TDS (it is 5 per cent of TDS if the payment/credit exceeds Rs. 10 crore).
3. If the purchaser/licensee/lessee is a non-resident (individual/HUF/AOP/artificial juridical person) and the amount subject to TCS exceeds Rs. 50 lakh but does not exceed Rs. 1 crore, surcharge is 10 per cent of TCS. If it exceeds Rs. 1 crore but does not exceed Rs. 2 crore, surcharge is 15 per cent of TCS. If it exceeds Rs. 2 crore but does not exceed Rs. 5 crore, surcharge is 25 per cent of TCS. If it exceeds Rs. 5 crore, surcharge is 37 per cent (25 per cent under new tax regime) of TCS. If the purchaser/licensee/lessee is a non-resident firm and the amount subject to TCS exceeds Rs. 1 crore, surcharge is 12 per cent of TCS. If the purchaser/licensee/lessee is a non-resident co-operative society and the amount subject to TCS exceeds Rs. 1 crore but does not exceed Rs. 10 crore, surcharge is 7 per cent of TCS (it is 12 per cent of TCS if the amounts subject to TCS exceeds Rs. 10 crore). If the purchaser/licensee/lessee is a foreign company and the amount subject to TCS exceeds Rs. 1 crore but does not exceed Rs. 10 crore, surcharge is 2 per cent of TCS (it is 5 per cent of TCS if the amounts subject to TCS exceeds Rs. 10 crore).
4. If deductee/collectee is a non-resident AOP (having only companies as its members), rate of surcharge cannot exceed 15%.

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1. As passed by Lok Sabha.
2. Rebate under section 87A is available in the case of a resident individual if his/her taxable income does not exceed Rs. 5,00,000.
3. Rebate under section 87A is available in the case of a resident individual if his/her taxable income does not exceed Rs. 7,00,000 (for the assessment year 2025-26) or Rs. 12,00,000 (for the assessment year 2026-27).

3a. Where the total income of a “specified fund” [as referred to section 10(4D)] includes any income in respect of securities [as given under section 115AD(1)(a)], the rate of surcharge/health and education cess is nil.

3a. Where the total income of a “specified fund” [as referred to section 10(4D)] includes any income in respect of securities [as given under section 115AD(1)(a)], the rate of surcharge/health and education cess is nil.

4. “International Financial Services Centre” means an International Financial Services Centre which is set-up in a special economic zone and approved by the Central Government under section 18(1) of Special Economic Zones Act, 2005.