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Tax on ₹5 Lakh Salary in FY 2026-27 (New Regime)
On a gross salary of ₹5,00,000, the new regime applies a ₹75,000 standard deduction, leaving a taxable income of ₹4,25,000. The income tax for FY 2026-27 (AY 2027-28) works out to ₹0 including 4% cess.
Slab-by-slab breakdown (new regime)
| Income slab | Rate | Tax |
|---|---|---|
| ₹4,00,000 – ₹8,00,000 | 5% | ₹1,250 |
| Slab tax | ₹1,250 | |
| Less: Section 87A rebate | − ₹1,250 | |
| Health & education cess (4%) | ₹0 | |
| Total tax | ₹0 |
What happens to the next rupee at ₹5 lakh
At ₹5 lakh, the Section 87A rebate cancels the slab tax entirely — the effective rate is zero, and that remains true for every salary up to the rebate threshold. A ₹1 lakh raise from here keeps about ₹1,00,000. The number worth internalizing before the next appraisal: tax-free today does not mean tax-free after the raise, and salaries just past the threshold enter a marginal-relief zone where raises are taxed unusually heavily for a stretch.
New vs old regime
Under the old regime, with only the ₹50,000 standard deduction and no other deductions claimed, the tax on a ₹5 lakh salary would be about ₹0. The old regime only becomes cheaper if you claim substantial deductions (80C, 80D, HRA, home-loan interest) — see the breakeven guide for how much you would need.
Frequently asked questions
How much tax on ₹5 lakh salary in FY 2026-27?
Under the new regime, a ₹5 lakh salary has ₹0 income tax for FY 2026-27 after the ₹75,000 standard deduction (taxable income ₹4,25,000). Monthly take-home is about ₹41,667.
Is a ₹5 lakh salary tax-free under the new regime?
Yes. After the ₹75,000 standard deduction and the Section 87A rebate, the tax on a ₹5 lakh salary is nil under the new regime for FY 2026-27.
Is the old or new regime better for a ₹5 lakh salary?
With no deductions beyond the standard deduction, the old regime tax on a ₹5 lakh salary is about ₹0 versus ₹0 under the new regime. The old regime only wins once your 80C, 80D, HRA and home-loan deductions are large enough to close that gap.
How much of a raise do I keep at ₹5 lakh?
A ₹1 lakh raise from ₹5 lakh keeps about ₹1,00,000 under the new regime — the new income lands in the 5% slab (plus cess), though at this level the Section 87A rebate still wipes the total tax to nil. Only the new income is taxed at that slab rate; crossing a slab never re-taxes what you already earn.
How much in deductions would make the old regime win at ₹5 lakh?
None can — the new regime is already nil at ₹5 lakh after the rebate, and no amount of 80C or HRA paperwork beats zero. The old regime only becomes interesting at higher salaries with very large deductions.
Reviewed June 28, 2026. Planning estimate for salaried individuals under the new regime; excludes surcharge and special income. Not tax advice. Verify on the Income Tax Department portal.