In summary

Income tax on 95 lakh salary for Tax Year 2026-27 is estimated at Rs. 27.54 lakh under the new regime and Rs. 30.29 lakh under the old regime, based on the assumptions below.

• The new-regime standard deduction is Rs. 75,000.
• The old-regime standard deduction is Rs. 50,000.
• After the standard deduction, the taxable salary is Rs. 94.25 lakh under the new regime.
• A 10% surcharge applies because the taxable income in this illustration is above Rs. 50 lakh but does not exceed Rs. 1 crore.
• A 4% Health and Education Cess applies to income tax plus surcharge.
• Eligible life insurance premiums can form part of the aggregate Rs. 1.5 lakh deduction under Section 123 under the applicable old-regime provisions.

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Because your income exceeds Rs. 50 lakh, the calculation also includes a 10% surcharge on the income tax. The 4% Health and Education Cess is then calculated on income tax plus surcharge.

How is the new-regime tax calculated?

Under the new regime, the first Rs. 4 lakh of taxable income is taxed at Nil. The next slabs are taxed at 5%, 10%, 15%, 20% and 25%, while income above Rs. 24 lakh is taxed at 30%.

For taxable income of Rs. 94.25 lakh:

Income tax = Rs. 24,07,500

Surcharge = Rs. 24,07,500 × 10% = Rs. 2,40,750

Cess = (Rs. 24,07,500 + Rs. 2,40,750) × 4% = Rs. 1,05,930

Total tax = Rs. 27,54,180

How is the old-regime tax calculated?

Under the old regime, an individual below 60 years pays Nil tax up to Rs. 2.5 lakh, 5% from Rs. 2.5 lakh to Rs. 5 lakh, 20% from Rs. 5 lakh to Rs. 10 lakh and 30% above Rs. 10 lakh. The standard deduction is Rs. 50,000.

For taxable income of Rs. 94.5 lakh:

Income tax = Rs. 26,47,500

Surcharge = Rs. 26,47,500 × 10% = Rs. 2,64,750

Cess = (Rs. 26,47,500 + Rs. 2,64,750) × 4% = Rs. 1,16,490

Total tax = Rs. 30,28,740

These are illustrative calculations. Your final tax can differ if you have other income, eligible deductions, exemptions, special-rate income or different salary components.

The current tax year is also governed by the Income Tax Act, 2025. From 1 April 2026, the new Act uses the term Tax Year and provides the new regime under Section 202. Tax Year 2026-27 covers income earned from 1 April 2026 to 31 March 2027.

What matters at a Rs. 95 lakh income?

The most relevant figures for this salary level are:

• New-regime standard deduction: Rs. 75,000.
• Old-regime standard deduction: Rs. 50,000.
• Surcharge at this income level: 10% because income is between Rs. 50 lakh and Rs. 1 crore.
• Health and Education Cess: 4% on income tax plus surcharge.
• Section 87A rebate: Not available because the taxable income in this example is well above Rs. 12 lakh.

The 25% surcharge cap under the new regime does not mean that a Rs. 95 lakh salary attracts a 25% surcharge. At this income level, the applicable surcharge is 10%.

The old regime also allows eligible deductions and exemptions that are not available under the new regime.

What deductions and exemptions can you consider?

Depending on your circumstances, the old regime can allow eligible benefits linked to:

Under the Income Tax Act, 2025, eligible life insurance premiums fall under Section 123, with the aggregate deduction limited to Rs. 1.5 lakh and subject to Schedule XV conditions.

Old tax regime slabs 

New tax regime slabs 

How does life insurance fit into both regimes?

The tax treatment of life insurance depends on whether you are looking at the premium paid or the policy proceeds.

• Old regime: Eligible life insurance premiums can form part of the aggregate Rs. 1.5 lakh deduction under Section 123, subject to the conditions in Schedule XV.
• New regime: The Section 123 deduction is not available under the new concessional regime. However, eligible life insurance policy proceeds continue to be covered by the applicable exclusion provisions under Section 11 and Schedule II, subject to the conditions specified under the law.

What happens if you use the Rs. 1.5 lakh Section 123 deduction?

Suppose you choose the old regime and qualify for the full Rs. 1.5 lakh aggregate deduction under Section 123.

Your taxable income becomes:

Rs. 95,00,000 − Rs. 50,000 standard deduction − Rs. 1,50,000 deduction = Rs. 93,00,000.

In this illustration, the Rs. 1.5 lakh deduction reduces the calculated tax by Rs. 51,480.

The Rs. 1.5 lakh limit is an aggregate deduction for specified payments under Section 123. It is not an additional Rs. 1.5 lakh deduction available only for life insurance.

Understand ULIP tax treatment

ULIPs combine life insurance with an investment component.

Their policy proceeds are subject to the applicable provisions and conditions under the Income-tax Act, 2025. Therefore, their maturity proceeds should not be described as automatically tax-free in every case.

Consider life insurance riders based on your needs

Life insurance policies may offer riders such as critical illness or accidental death cover, as described in the source article. Any tax treatment depends on the nature of the premium and the applicable tax provisions.

Tax benefits should not be treated as the only reason to select a rider.

Compare life insurance options based on the protection you need and check a quote. Get quote.

Life insurance can affect your tax planning in two different ways: through eligible premium deductions and through the tax treatment of policy proceeds.

For Tax Year 2026-27, eligible life insurance premiums can qualify for the aggregate Rs. 1.5 lakh deduction under Section 123 when the applicable old-regime provisions and Schedule XV conditions are met.

Policy proceeds are dealt with separately under Section 11 and Schedule II. Non-death receipts can be subject to specified conditions, while the Schedule provides separate treatment for sums received on death.

Endowment plans combine life insurance with a savings component. Their tax treatment depends on the applicable policy terms and statutory conditions.

Income tax on 95 lakh salary for Tax Year 2026-27 is estimated at Rs. 27.54 lakh under the new regime and Rs. 30.29 lakh under the old regime in the illustration used here.

The calculation includes the applicable standard deduction, 10% surcharge and 4% Health and Education Cess. Budget 2026 did not change the individual income-tax rates for Tax Year 2026-27.

The old regime can still be relevant when you have eligible deductions and exemptions. Eligible life insurance premiums can form part of the aggregate Rs. 1.5 lakh deduction under Section 123, subject to the applicable conditions.

Consider the tax regime, deductions and your financial protection requirements together when planning your finances.