What are Income Tax rates under new & old tax regime as govt made no changes this year?
The Indian government has chosen to maintain the status quo on personal income tax rates in the Budget 2026, bringing a sense of stability and predictability for taxpayers. As announced by Finance Minister Nirmala Sitharaman, the existing tax slabs and rates will continue to apply, with no changes made to either the new or old tax regimes. In this article, we will delve into the details of the income tax rates under both regimes, highlighting the key differences and implications for taxpayers.
New Tax Regime: A More Simplified Approach
Introduced in 2020, the new tax regime offers a more streamlined approach to income taxation, with fewer deductions and exemptions. The tax rates under this regime are as follows:
- Income up to ₹12 lakh: 0% (tax-free)
- Income between ₹12 lakh and ₹16 lakh: 15%
- Income between ₹16 lakh and ₹20 lakh: 20%
- Income between ₹20 lakh and ₹24 lakh: 25%
- Income above ₹24 lakh: 30%
The new tax regime is designed to be more straightforward, with reduced compliance requirements and minimal deductions. However, it is essential to note that taxpayers who opt for this regime will have to forgo certain exemptions and deductions, such as those related to housing loans, investments, and charitable donations.
Old Tax Regime: A More Traditional Approach
The old tax regime, on the other hand, offers a more traditional approach to income taxation, with a wider range of deductions and exemptions. The tax rates under this regime are as follows:
- Income up to ₹2.5 lakh: 0% (tax-free)
- Income between ₹2.5 lakh and ₹5 lakh: 5%
- Income between ₹5 lakh and ₹10 lakh: 20%
- Income above ₹10 lakh: 30%
The old tax regime provides taxpayers with more flexibility in terms of deductions and exemptions, allowing them to claim benefits on various expenses, such as housing loans, medical bills, and charitable donations. However, this regime also requires more complex compliance and documentation, which can be time-consuming and tedious.
Comparison of New and Old Tax Regimes
When comparing the two regimes, it is essential to consider individual circumstances and financial goals. The new tax regime is more suitable for taxpayers with relatively simple financial situations, who do not require multiple deductions and exemptions. On the other hand, the old tax regime is more beneficial for taxpayers with complex financial situations, who can take advantage of various deductions and exemptions to minimize their tax liability.
Implications of No Changes in Tax Rates
The decision to maintain the existing tax rates and slabs has significant implications for taxpayers. With no changes made to the tax structure, taxpayers can continue to plan their finances and investments with a sense of stability and predictability. This stability can also encourage economic growth, as taxpayers and businesses can make informed decisions about investments and expansions.
However, some experts argue that the lack of changes in tax rates may not provide adequate relief to taxpayers, particularly those in the lower and middle-income brackets. With rising inflation and living costs, taxpayers may require more substantial tax breaks to maintain their purchasing power and standard of living.
Conclusion
In conclusion, the Budget 2026 has maintained the status quo on personal income tax rates, with no changes made to either the new or old tax regimes. Taxpayers can continue to choose between the two regimes, depending on their individual circumstances and financial goals. While the new tax regime offers a more simplified approach, the old tax regime provides more flexibility in terms of deductions and exemptions. As the Indian economy continues to evolve, it is essential to monitor the tax landscape and adjust accordingly to ensure that the tax system remains fair, equitable, and supportive of economic growth.
For more information on the Budget 2026 and its implications, 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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