Retiring in India
India: the tax picture for FIRE
India's income tax is modelled on the new (default) regime for 2026: there is no separate personal allowance, but a 0% slab covers income up to ₹4,00,000, with bands stepping through 5%, 10%, 15%, 20% and 25% before a top rate of 30% above ₹24,00,000. The Section 87A rebate is modelled as a separate credit rather than an allowance: total income up to ₹12,00,000 pays NIL income tax, with marginal relief tapering the saving above that up to a break-even of about ₹12,70,588.
Long-term gains on listed equities are taxed at a flat 12.5% above an annual exemption of ₹1,25,000. At death there is nothing to model: India abolished estate tax in 1985, and wealth tax went in 2015. Ember's illustrative cost-of-living factor for India is 0.32, though confidence in that figure is low. Coverage is a draft at medium confidence: the §87A rebate is modelled, but the 4% health-and-education cess, high-income surcharges and the old regime are not, so actual liabilities can differ.
Income tax (2026)medium confidence
| Band | Rate |
|---|---|
| ₹0 – ₹400,000 | 0% |
| ₹400,000 – ₹800,000 | 5% |
| ₹800,000 – ₹1,200,000 | 10% |
| ₹1,200,000 – ₹1,600,000 | 15% |
| ₹1,600,000 – ₹2,000,000 | 20% |
| ₹2,000,000 – ₹2,400,000 | 25% |
| above ₹2,400,000 | 30% |
What this model doesn’t capture (10)
- §87A rebate + marginal relief MODELLED (taxRebate module) and s.16(ia) Rs 75,000 standard deduction MODELLED for pension income (Queue B3): pensioner NIL threshold Rs 12,75,000. Salary income does not receive the SD in-engine yet (retiree cohort focus); a family/other-sources annuity is over-relieved by up to Rs 50,000 (its own deduction is one-third of the income or Rs 25,000, whichever is less)
- Health & Education Cess of 4% is applied on top of tax+surcharge; not modelled (understates total liability by ~4% of tax).
- Surcharge on high incomes is not modelled: under the new default regime it runs 10% (total income over Rs 50L up to Rs 1cr), 15% (over Rs 1cr up to Rs 2cr) and 25% (over Rs 2cr, excluding the dividend and s.196-198 capital-gains component, which is itself capped at 15%), with marginal relief throughout; the 37% rate does not apply under this regime.
- OLD regime (with Chapter VI-A deductions such as 80C, 80D and HRA, a standard deduction of Rs 50,000, and its separate slab structure 0/5/20/30 with a Rs 2,50,000 basic exemption — Rs 3,00,000 for residents aged 60-79 and Rs 5,00,000 for residents aged 80 or over) is not supported; only the NEW default regime is encoded. Rs 75,000 is the new-regime standard deduction only.
- Marginal relief on the SURCHARGE (high incomes) not modelled — the §87A marginal relief IS modelled.
- Capital gains taxed under separate schedules (LTCG 12.5%, STCG 20% on listed equity, post-Jul 2024) — not part of this income-tax band schedule.
- No wealth tax (abolished 2015) and no inheritance/estate tax (abolished 1985) — correctly nothing to model.
- Slab thresholds are set by annual Finance Act, not statutorily indexed to inflation.
- selfEmployment: no regime module — self-employed social contributions / business-income surcharges for this jurisdiction are not modelled
- The rebate is available only to a resident individual; the engine applies it on the residence stack only, so Indian-source income held by a non-resident is outside the modelled path.
Capital gainsmedium confidence
Capital gains are taxed at a flat 12.5% above an annual exemption of ₹125,000.
Listed-equity LTCG 12.5% above the ₹1.25 lakh/yr exemption (no indexation, post-Jul-2024 rules; unchanged under the 2025 Act from FY2026-27). Hides: 20% STCG on equity held <12 months, surcharge (capped 15% on LTCG) and 4% cess.
Inheritance & estate taxhigh confidence
No inheritance or estate tax on death transfers.
No death-transfer tax of any kind: the Estate Duty Act 1953 was abolished in 1985 and no inheritance or estate tax exists today (the Wealth Tax Act 1957 was separately abolished by Finance Act 2015). Nor is an inheritance taxed as income in the heir's hands: s.92(3)(c) of the Income-tax Act, 2025 (in force 1 April 2026; s.56(2)(x) third proviso cl.(c) of the Income-tax Act, 1961 before that) excludes anything received 'under a will or by way of inheritance' from the gift charge outright — the exclusion is unconditional and does NOT depend on the heir being a 'relative', so a partner, friend, step-child or charity inherits free of income tax exactly as a child does. s.92(3)(d) separately excludes gifts made in contemplation of the donor's death. periodic re-introduction debate is political noise, not law: the Income-tax Act, 2025 rewrite carried no death-transfer charge, and the Ministry of Finance's Budget 2026 tax-reform paper (February 2026) does not mention inheritance, estate or succession tax at all. Statutory vintage: India rewrote its direct-tax code — the Income-tax Act, 2025 (No. 30 of 2025, assent 21 August 2025) came into force on 1 April 2026 and governs tax year 2026-27 onwards; it introduced no death-transfer tax, and the 1961 Act's section numbers cited in older material (s.56(2)(x), s.47(iii), s.49(1)) now map to s.92, s.70(1)(b) and s.73(1) respectively.
Cost of living
32%
of a UK baseline (100%) — a rough, illustrative comparison, not a forecast.
UK private pension
Under the UK treaty, a UK-sourced private pension paid to a resident here is generally taxed only where you live (not by the UK).
Common questions
How are capital gains taxed in India?
Long-term gains on listed equities are taxed at a flat 12.5% above an annual exemption of ₹1,25,000, with no indexation, under the post-July-2024 rules (unchanged under the 2025 Act for FY2026-27). The modelled rate hides some layers: short-term gains on equity held under 12 months are taxed at 20%, and a surcharge (capped at 15% on long-term gains) plus the 4% cess apply on top. Confidence in this figure is medium.
Is there inheritance tax in India?
No. India abolished estate tax in 1985, so there is no inheritance or estate tax on death transfers, and wealth tax was abolished in 2015. Ember therefore models no death-transfer tax for India.
How does Ember estimate India's cost of living?
Ember applies an illustrative cost-of-living factor of 0.32 for India. Confidence in this figure is low, so it is best read as a broad illustration for comparing FIRE numbers across countries rather than a budgeting-grade estimate.
What does India do to your FIRE date?
The free calculator compares your number across every covered country; the full planner models your actual accounts, pensions, residency moves and these exact tax rules — with the maths behind every figure shown.