What are Income Tax rates under new & old tax regime as govt made no changes this year?
The Budget 2026 has been announced, and as expected, it has brought a mix of excitement and disappointment for taxpayers in India. One of the most significant aspects of the budget is the income tax rates, which have been a subject of discussion and speculation in recent months. In this blog post, we will delve into the details of the income tax rates under the new and old tax regimes, and what it means for taxpayers.
As per the budget announcement, the government has decided to keep the personal income tax rates unchanged. This means that taxpayers will continue to pay taxes according to the existing slabs and rates. For those who are unaware, the government had introduced a new tax regime in 2020, which offered an alternative to the existing old tax regime. The new tax regime offered lower tax rates, but with certain conditions and limitations.
Under the new tax 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
On the other hand, the old tax regime has the following income tax rates:
- 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
As we can see, the new tax regime offers a more gradual and progressive tax structure, with a higher tax-free limit and lower tax rates for lower-income groups. However, the old tax regime offers more deductions and exemptions, which can be beneficial for certain taxpayers.
The decision to keep the income tax rates unchanged is likely to be a relief for many taxpayers, who were expecting a hike in taxes due to the economic conditions. However, it also means that taxpayers will not get any additional benefits or reductions in taxes, which may be a disappointment for some.
It’s worth noting that the government has been encouraging taxpayers to opt for the new tax regime, which is simpler and more transparent. The new tax regime does not offer any deductions or exemptions, except for a standard deduction of ₹50,000. This means that taxpayers who opt for the new tax regime will have to pay taxes on their gross income, without any deductions or exemptions.
On the other hand, the old tax regime offers a wide range of deductions and exemptions, including deductions for housing loan interest, medical expenses, and charitable donations. However, the old tax regime also has a more complex tax structure, with multiple tax slabs and rates.
Ultimately, the choice between the new and old tax regimes depends on individual circumstances and tax planning strategies. Taxpayers should carefully evaluate their income, expenses, and tax liabilities before deciding which tax regime to opt for.
In conclusion, the Budget 2026 has kept the personal income tax rates unchanged, which is a relief for many taxpayers. The new tax regime offers a more gradual and progressive tax structure, while the old tax regime offers more deductions and exemptions. Taxpayers should carefully evaluate their options and choose the tax regime that best suits their needs and circumstances.
For more information on the Budget 2026 and the income tax rates, you can visit the official government website or consult a tax expert. Additionally, you can check out the news article on the Indian Express website for more details and analysis.
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