Income Tax Calculator FY 2026-27 in Excel: New vs Old Regime with Slabs and Rebate Formulas

Indian Taxation & PayrollAssessment Year: 2027-28Rules: Section 115BAC & Old Regime

Calculating income tax liability in India requires comparing two distinct tax frameworks: the default New Tax Regime (Section 115BAC) featuring revised slab rates and a higher Section 87A rebate, and the traditional Old Tax Regime which permits deductions under Chapter VI-A (Section 80C, 80D, HRA, and Home Loan Interest). Building a dynamic Excel model allows employees and payroll teams to determine the exact tax savings instantly.

FY 2026-27 Tax Slabs Comparison Table

The SUMPRODUCT Tax Bracket Formula

Instead of unwieldy nested IF statements, the most robust and elegant way to calculate slab-based progressive income tax in Excel is using SUMPRODUCT with differential rates:

' Dynamic New Regime Tax Formula (Cell B2 = Taxable Income after Standard Deduction)
=SUMPRODUCT(
    (B2 > {0; 300000; 700000; 1000000; 1200000; 1500000}) *
    (B2 - {0; 300000; 700000; 1000000; 1200000; 1500000}),
    {0; 0.05; 0.05; 0.05; 0.05; 0.10}
)

Factoring in Section 87A Rebate & Health/Education Cess

Under the New Regime, if taxable income does not exceed ₹7,00,000 (or ₹7,75,000 for salaried employees claiming the ₹75,000 standard deduction), full tax rebate under Section 87A applies:

' Tax after 87A Rebate and 4% Health & Education Cess
=LET(
    raw_tax, [Formula Above],
    tax_after_rebate, IF(B2 <= 700000, 0, raw_tax),
    ROUND(tax_after_rebate * 1.04, 0)
)

Frequently Asked Questions

What is the Standard Deduction for salaried employees in FY 2026-27?

Under the New Tax Regime, the standard deduction for salaried individuals is ₹75,000, while under the Old Regime it remains ₹50,000.

When is the Old Regime better than the New Regime?

The Old Regime is generally more beneficial only if your total eligible deductions (80C, 80D, HRA, home loan interest under Section 24b) exceed ₹3,75,000 to ₹4,25,000 depending on your gross CTC bracket.

How is marginal relief calculated if income slightly exceeds ₹7 Lakhs?

Marginal relief ensures that the tax payable on income marginally exceeding ₹7,00,000 cannot exceed the amount by which the income exceeds ₹7,00,000.

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