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 about a mix of emotions among the citizens of India. One of the most significant aspects of the budget is the income tax rates, which have been a topic of discussion for many years now. In this year’s budget, the government has decided to keep the personal income tax rates unchanged, providing relief to many taxpayers. In this blog post, we will delve into the details of the income tax rates under the new and old tax regimes and explore what this means for taxpayers.
New Tax Regime
The new tax regime was introduced in 2020, with the aim of simplifying the tax structure and reducing the compliance burden on taxpayers. 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
This regime is optional, and taxpayers can choose to opt for it or stick with the old regime. The new regime does away with most deductions and exemptions, providing a simpler and more straightforward tax structure.
Old Tax Regime
The old tax regime, on the other hand, has been in existence for many years and provides a more complex tax structure with various 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
This regime provides various deductions and exemptions, such as the standard deduction, deduction for housing loan interest, and exemption for investments in certain instruments. However, it also requires taxpayers to maintain detailed records and comply with various provisions, making it more complex.
Comparison of New and Old Tax Regimes
So, which tax regime is more beneficial? The answer depends on individual circumstances. The new tax regime is simpler and more straightforward, with lower tax rates for lower-income groups. However, it does away with most deductions and exemptions, which may not be beneficial for taxpayers who have made significant investments in tax-saving instruments.
On the other hand, the old tax regime provides more deductions and exemptions, which can help reduce the tax liability. However, it is more complex and requires taxpayers to maintain detailed records and comply with various provisions.
Impact of No Changes in Income Tax Rates
The decision to keep the income tax rates unchanged in the Budget 2026 is likely to have a mixed impact on taxpayers. On the one hand, it provides stability and predictability, allowing taxpayers to plan their finances better. On the other hand, it may not provide the relief that many taxpayers were expecting, especially in the context of rising inflation and living costs.
Conclusion
In conclusion, the income tax rates under the new and old tax regimes remain unchanged in the Budget 2026. While the new regime provides a simpler and more straightforward tax structure, the old regime offers more deductions and exemptions. Taxpayers need to carefully evaluate their individual circumstances and choose the regime that best suits their needs. With no changes in income tax rates, taxpayers can expect stability and predictability, but may not get the relief they were hoping for.
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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