Income Tax Limit: Exemption, Rebate, and Filing Thresholds for 2026-27

Last updated: Oct 2026

The income tax limit has three layers: the basic exemption limit, the rebate limit and the filing limit. Each income tax limit answers a different question. They are not the same number. This page covers Tax Year 2026-27.

• Basic exemption, new regime: Rs. 4 lakh at every age
• Basic exemption, old regime: Rs. 2.5 lakh below 60, Rs. 3 lakh at 60 to 79, Rs. 5 lakh at 80 and above
• Rebate: up to Rs. 60,000 in the new regime for taxable income up to Rs. 12 lakh
• Salaried tax-free income: Rs. 12.75 lakh after the Rs. 75,000 standard deduction

• Filing: above the exemption limit, and in 7 cases below it

  
  

Check all three limits before you decide that you owe nothing and need not file. A rebate cancels tax, but it never cancels the duty to file.

The basic exemption limit is the income on which you pay no tax before any rebate. It depends on your regime and, in the old regime, on your age.

The Income Tax Act, 2025 applies from Tax Year 2026-27, and slab rates did not change in the Union Budget of 1 February 2026. For returns on income earned up to 31 March 2026, the Income Tax Act, 1961 and assessment years apply.

A rebate cancels the tax for residents whose taxable income is up to Rs. 12 lakh in the new regime. The rebate is formerly Section 87A.

A salaried person gets a standard deduction of Rs. 75,000 in the new regime, so a salary of Rs. 12.75 lakh is tax-free. Marginal relief limits the tax just above the limit. On a taxable income of Rs. 12.5 lakh, slab tax is Rs. 67,500, but the tax cannot exceed the Rs. 50,000 above Rs. 12 lakh, so you pay Rs. 52,000 with cess.

The rebate and the higher senior limits are for resident individuals. Non-residents do not get them.

You must file when your gross total income exceeds the basic exemption limit, before deductions and before the rebate. The rebate makes tax nil, but it does not remove the duty to file.

You must also file below the limit in 7 cases, under the seventh proviso to Section 139(1) and Rule 12AB of the Income Tax Rules, 1962.

Each limit answers a different question, and a person can pass one and fail another.

If your income is above Rs. 12.75 lakh, the rebate ends. The guide to how to save tax on a salary above Rs. 12 lakh shows what to do.

Consider Sunil, a 52-year-old shopkeeper in Indore with a household income of Rs. 70,000 a month and a CIBIL Score of 742. His taxable income is Rs. 3.6 lakh, below the Rs. 4 lakh limit. He sold a plot in the year and deposited Rs. 52 lakh in his savings account.

Sunil files, even though he owes nothing. The filing also records the plot sale. For the forms, see the guide to which return form a salaried person files.

Bajaj Finance reviews income documents and returns for the last 2 years. Filing a return, even at nil tax, gives you the document a lender asks for. Bajaj Finance does not offer home loans to Non-Resident Indians (NRIs).

Approval timelines can extend where returns are missing for a year, and minimum income thresholds can differ by city. Check your home loan eligibility.