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, it has brought about a mix of emotions among the citizens of India. One of the most anticipated aspects of the budget was the revision of income tax rates. However, this year, the government has decided to keep the personal income tax rates unchanged, providing a sense of relief to many taxpayers. In this blog post, we will delve into the details of the income tax rates under both the new and old tax regimes, and what it means for you.
New Tax Regime:
The new tax regime, which was introduced in 2020, has been gaining popularity among taxpayers due to its simplicity and lower tax rates. Under this regime, the income tax rates are as follows:
- Income up to ₹12 lakh is tax-free, providing a significant exemption to low- and middle-income earners.
- Income between ₹12 lakh and ₹16 lakh is taxed at a rate of 15%, which is relatively lower compared to the old tax regime.
- Income between ₹16 lakh and ₹20 lakh is taxed at a rate of 20%, which is still lower than the tax rate under the old regime.
- Income between ₹20 lakh and ₹24 lakh is taxed at a rate of 25%, which is higher than the previous slab but still competitive.
- Income above ₹24 lakh is taxed at a rate of 30%, which is the highest tax rate under the new regime.
The new tax regime is attractive to many taxpayers due to its simplicity and lower tax rates. However, it is essential to note that this regime does not allow for deductions and exemptions, which may not be beneficial to all taxpayers.
Old Tax Regime:
The old tax regime, which has been in existence for decades, provides a more traditional approach to taxation. Under this regime, the income tax rates are as follows:
- Income up to ₹2.5 lakh is tax-free, which is lower than the exemption limit under the new regime.
- Income between ₹2.5 lakh and ₹5 lakh is taxed at a rate of 5%, which is lower than the tax rate under the new regime.
- Income between ₹5 lakh and ₹10 lakh is taxed at a rate of 20%, which is higher than the tax rate under the new regime.
- Income above ₹10 lakh is taxed at a rate of 30%, which is the same as the highest tax rate under the new regime.
The old tax regime allows for deductions and exemptions, which can be beneficial to taxpayers who have investments in tax-saving instruments or have significant expenses that can be claimed as deductions.
Comparison of New and Old Tax Regimes:
Both the new and old tax regimes have their advantages and disadvantages. The new tax regime is simpler and has lower tax rates, but it does not allow for deductions and exemptions. The old tax regime, on the other hand, provides more flexibility in terms of deductions and exemptions but has higher tax rates.
Ultimately, the choice between the new and old tax regimes depends on individual circumstances. Taxpayers who have significant investments in tax-saving instruments or have high expenses that can be claimed as deductions may find the old tax regime more beneficial. On the other hand, taxpayers who have simple tax affairs and do not have significant deductions or exemptions may find the new tax regime more attractive.
Conclusion:
The Union Budget 2026 has not brought about any changes to the personal income tax rates, which is a welcome move for many taxpayers. The new tax regime continues to offer lower tax rates and simplicity, while the old tax regime provides more flexibility in terms of deductions and exemptions. As a taxpayer, it is essential to understand the tax rates and regimes to make informed decisions about your tax affairs. We hope this blog post has provided you with a comprehensive understanding of the income tax rates under both the new and old tax regimes.
For more information on the Union Budget 2026 and the latest news on 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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