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 emotions among the citizens of India. One of the most anticipated aspects of the budget was the income tax rates, and surprisingly, the government has decided to keep the personal income tax rates unchanged. 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 the taxpayers.
For those who are unaware, the Indian government introduced a new tax regime in 2020, which offered an alternative to the existing old tax regime. The new tax regime came with its own set of tax slabs and rates, which were designed to simplify the tax structure and reduce the tax burden on individuals. However, the old tax regime was also kept in place, allowing taxpayers to choose between the two.
New Tax Regime
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
As can be seen, the new tax regime offers a more progressive tax structure, with higher income earners being taxed at a higher rate. The tax-free limit of ₹12 lakh is also a significant benefit for low- and middle-income earners.
Old Tax Regime
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
The old tax regime has a lower tax-free limit of ₹2.5 lakh, but it also offers more tax deductions and exemptions, which can help reduce the taxable income.
Comparison between New and Old Tax Regimes
Now, let’s compare the two tax regimes to see which one is more beneficial for taxpayers. The new tax regime offers a higher tax-free limit and a more progressive tax structure, but it also has fewer tax deductions and exemptions. On the other hand, the old tax regime has a lower tax-free limit, but it offers more tax deductions and exemptions, which can help reduce the taxable income.
Ultimately, the choice between the new and old tax regimes depends on individual circumstances. Those who have a high income and few tax deductions may find the new tax regime more beneficial, while those who have a lower income and more tax deductions may prefer the old tax regime.
Impact of No Changes in Income Tax Rates
The decision to keep the income tax rates unchanged in the Budget 2026 may come as a disappointment to some taxpayers who were expecting a reduction in tax rates. However, it’s essential to note that the government has already introduced several measures to simplify the tax structure and reduce the tax burden on individuals.
The fact that the government has not made any changes to the income tax rates suggests that it is satisfied with the current tax structure and wants to maintain stability in the tax system. This stability can be beneficial for taxpayers, as it allows them to plan their finances with certainty.
Conclusion
In conclusion, the income tax rates under the new and old tax regimes remain unchanged in the Budget 2026. The new tax regime offers a higher tax-free limit and a more progressive tax structure, while the old tax regime has a lower tax-free limit but more tax deductions and exemptions. Taxpayers need to carefully evaluate their individual circumstances to determine which tax regime is more beneficial for them.
As the Indian economy continues to grow and evolve, it’s essential to have a tax system that is fair, simple, and stable. The government’s decision to maintain the current tax structure is a step in the right direction, and we can expect further reforms in the future to make the tax system even more taxpayer-friendly.
For more information on the Budget 2026 and the income tax rates, you can 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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