What are Income Tax rates under new & old tax regime as govt made no changes this year?
The Union Budget 2026 has been announced, and as expected, there were no changes made to the personal income tax rates. The government has decided to keep the tax slabs unchanged, providing relief to taxpayers who were expecting some revisions. In this blog post, we will delve into the details of the income tax rates under both the new and old tax regimes, highlighting the key differences and implications for taxpayers.
New Tax Regime
The new tax regime, which was introduced in 2020, offers a simpler and more streamlined tax structure. Under this regime, the income tax rates are as follows:
- Income up to ₹12 lakh is tax-free
- 15% tax on income between ₹12 lakh and ₹16 lakh
- 20% tax on income between ₹16 lakh and ₹20 lakh
- 25% tax on income between ₹20 lakh and ₹24 lakh
- 30% tax on income above ₹24 lakh
The new tax regime is designed to reduce the complexity of the tax system and provide a more straightforward approach to taxation. However, it also comes with some limitations, such as the inability to claim certain deductions and exemptions.
Old Tax Regime
The old tax regime, on the other hand, offers a more traditional approach to taxation, with a greater emphasis on deductions and exemptions. Under this regime, the income tax rates are as follows:
- 0% tax on income up to ₹2.5 lakh
- 5% tax on income between ₹2.5 lakh and ₹5 lakh
- 20% tax on income between ₹5 lakh and ₹10 lakh
- 30% tax on income above ₹10 lakh
The old tax regime provides taxpayers with a wider range of deductions and exemptions, such as the ability to claim deductions on housing loans, investments, and other expenses. However, it also comes with a more complex tax structure, which can be challenging to navigate.
Key Differences between New and Old Tax Regimes
The key differences between the new and old tax regimes lie in the tax slabs and the availability of deductions and exemptions. The new tax regime offers a more simplified tax structure, with fewer tax slabs and a lower tax rate for lower-income earners. However, it also comes with limitations on deductions and exemptions, which may impact taxpayers who rely heavily on these benefits.
In contrast, the old tax regime offers a more traditional approach to taxation, with a greater emphasis on deductions and exemptions. However, it also comes with a more complex tax structure, which can be challenging to navigate.
Implications for Taxpayers
The decision to keep the personal income tax rates unchanged will have significant implications for taxpayers. For those who are already taxed under the new regime, there will be no changes to their tax liability. However, for those who are taxed under the old regime, the decision to keep the tax rates unchanged may provide some relief, as they will not have to worry about any increases in their tax liability.
It is also worth noting that the government’s decision to keep the tax rates unchanged may be seen as a positive move, as it provides stability and predictability for taxpayers. This can be particularly beneficial for businesses and individuals who are looking to plan their finances and make long-term investments.
Conclusion
In conclusion, the Union Budget 2026 has kept the personal income tax rates unchanged, providing relief to taxpayers who were expecting some revisions. The new tax regime offers a simplified tax structure, with lower tax rates for lower-income earners, while the old tax regime provides a more traditional approach to taxation, with a greater emphasis on deductions and exemptions. Understanding the key differences between the two regimes is crucial for taxpayers, as it can help them make informed decisions about their tax planning and financial investments.
For more information on the Union Budget 2026 and the income tax rates, please visit: https://indianexpress.com/article/india/budget-live-2026-new-vs-old-income-tax-rate-cut-slab-change-fm-nirmala-sitharaman-speech-announcements-10504348/lite/
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