A ₹7 lakh salary pays ₹0 income tax under the new regime for FY 2026-27. After the ₹75,000 standard deduction, taxable income is ₹6,25,000 — within the ₹12 lakh Section 87A rebate limit, so the tax is fully cancelled.
Good news if you earn ₹7 lakh: under the new tax regime for FY 2026-27 you pay no income tax at all. The ₹75,000 standard deduction brings your taxable income to ₹6,25,000, and because that's within ₹12 lakh, the Section 87A rebate wipes out the tax entirely. Here's exactly how it works — and the one thing to watch if your salary creeps above ₹12.75 lakh.
| Gross salary | ₹7,00,000 |
| Standard deduction | − ₹75,000 |
| Taxable income | ₹6,25,000 |
| Tax as per slabs | ₹0 |
| Section 87A rebate | − ₹0 |
| Total income tax | ₹0 |
These figures use the new tax regime introduced in Budget 2025 and left unchanged by Budget 2026 — so they are valid for both FY 2026-27 (AY 2026-27, the return you file in 2026) and the current FY 2026-27: a ₹75,000 standard deduction for salaried taxpayers; slabs of nil up to ₹4 lakh, 5% (₹4–8L), 10% (₹8–12L), 15% (₹12–16L), 20% (₹16–20L), 25% (₹20–24L) and 30% above ₹24 lakh; a 4% health & education cess; and a Section 87A rebate that makes taxable income up to ₹12 lakh fully tax-free. Because ₹7 lakh lands you inside the rebate zone, this is the single most tax-efficient salary band to negotiate into — a raise that pushes taxable income just over ₹12 lakh doesn't just lose the rebate on the extra income, it loses it entirely, which is why the ₹12.75 lakh CTC mark is worth being deliberate about. Use the interactive income tax calculator to compare both regimes for your exact numbers.
Under the new regime for FY 2026-27, a ₹7 lakh salary pays ₹0 income tax. The ₹75,000 standard deduction cuts taxable income to ₹6,25,000, within the ₹12 lakh Section 87A rebate limit.
Yes. Under the new regime a salary up to ₹12.75 lakh is effectively tax-free, thanks to the ₹75,000 standard deduction plus the Section 87A rebate on income up to ₹12 lakh — so ₹7 lakh pays nothing.
For most people at ₹7 lakh with ordinary deductions, the new regime is cheaper and simpler. The old regime only wins if you can claim large deductions — typically over ₹4–5 lakh combined (full 80C, 80D, HRA and home-loan interest). Compare both with the income tax calculator before you declare.