Savings from changes in Income Tax and GST rates: Full breakdown for those earning from Rs. 30,000 to Rs. 1 lakh per month

India’s tax landscape has shifted meaningfully this year. Two moves matter most to salaried families: a revised income tax slab structure under the new regime (effective from FY 2025–26, i.e., AY 2026–27) and a simplified two-rate GST. Put together, they can leave more money in your pocket each month.

Below is a clear, example-driven guide for households earning Rs. 30,000, Rs. 50,000 and Rs. 1,00,000 per month, plus tips on how to use an income tax calculator for AY 2026-27 to check your exact position.

What changed in income tax?

Under the new regime for AY 2026–27, the income tax slab structure and rebate have been overhauled. The slabs now are:

Under the new personal income tax regime, the Budget 2025–26 revised the income tax slab structure and raised relief so that no income tax is payable on total income up to Rs. 12,00,000 (salaried individuals effectively up to Rs. 12,75,000 after the Rs. 75,000 standard deduction).

What changed in GST

From 22 September 2025, the GST Council moved to two principal slabs – 5% and 18% – with a special higher rate for luxury/sin goods. Many mass-consumption items moved down a bracket, potentially reducing retail prices if the cuts are passed on fully by businesses.

Your monthly income: What the new rules mean

Use these illustrations as a starting point, then validate with an income tax calculator for AY 2026-27 to reflect your exact allowances and cess.

Note: Figures are indicative. Always verify with an income tax calculator for AY 2026-27 for your situation.

1) Income: Rs. 30,000 per month (Rs. 3.6 lakh a year)

• Income tax: Under both the previous and current new regimes, tax was effectively nil at this income level.
• GST: The two-slab structure could trim bills on everyday products. Savings depend on how much of the GST cut is passed on by brands/retailers.
• Action: Keep filing under the new regime and track monthly spends. A quick pass through an income tax calculator for AY 2026-27 confirms zero liability.

2) Income: Rs. 50,000 per month (Rs. 6 lakh a year)

• Income tax: Earlier, incomes up to Rs. 7 lakh were already zero-tax under rebate; status quo continues.
• GST: Expect modest savings across FMCG and selective durables if price cuts flow through.
• Action: Use an income tax calculator for AY 2026-27 to confirm zero tax. Direct monthly savings, if any, will mainly come from GST pass-through.

3) Income: Rs. 1,00,000 per month (Rs. 12 lakh a year)

• Income tax (big change):

• • Earlier new regime: Tax payable roughly Rs. 93,600 (including cess).
  • Now: Nil, because the rebate extends to the full income tax slab computation up to Rs. 12 lakh.
  • Annual saving: Around Rs. 93,600 (Approx. Rs. 7,800 per month).
  • GST: Depending on your basket, the two-slab structure can shave hundreds to a few thousand rupees a month.
  • Action: Run your numbers in an income tax calculator for AY 2026-27 to see the exact zero-tax impact and reset your monthly budget.

Where GST savings typically show up

With the income tax slab relief fixed by law and GST cuts dependent on market pass-through, plan conservatively. You may feel the impact in:

• Groceries and personal care: Products that shifted to 5% can drop in price if brands pass on the cut.
• Small appliances/electronics: Items moving from 28% to 18% can become visibly cheaper.
• Services: Where the rate fell, monthly bills may ease.

At the same time, actual savings depend on pricing decisions by companies and retailers.

Old vs. new: Which tax regime should you choose?

Even with the friendlier income tax slab design and rebate to Rs. 12 lakh, you should still compare regimes if you claim heavy deductions (e.g., housing loan interest under Section 24(b), specific allowances). Do a quick A/B check in an income tax calculator for AY 2026-27 before you file ITR:

• Choose the new regime if your income is up to Rs. 12 lakh or you do not have large deductions.
• Consider the old regime if your deductions are substantial and push your effective taxable income lower than the new regime outcome.

How to use an income tax calculator for AY 2026-27?

• Select AY 2026–27 and the new regime.
• Enter annual income (basic + allowances) and any eligible deductions (if you want to compare with the old regime).
• Let the tool compute tax under each income tax slab.
• Review cess and the automatic rebate impact up to Rs. 12 lakh under the new regime.
• Repeat the check for a spouse or parents if they file separately.

Running this exercise takes five minutes and gives you a precise view of monthly cash-in-hand.

What to do with the monthly surplus

• If your household sits in the Rs. 1 lakh bracket, the approx. Rs. 7,800 monthly tax savings are meaningful. You can:
• Increase emergency savings for 3–6 months’ expenses.
• Step up SIPs for long-term goals.
• Prepay small debts to reduce interest outgo
• Create a home-purchase buffer (token, stamp duty, registration, moving costs).

Even for lower incomes, compounding small monthly GST-driven savings builds discipline.

Final thoughts

By pairing the certainty of the revised income tax slab with realistic expectations on GST pass-through, and by checking your exact numbers in an income tax calculator for AY 2026-27, you can turn 2025’s policy changes into a cleaner, more confident monthly plan.