What are Income Tax rates under new & old tax regime as govt made no changes this year?
The Budget 2026 has been unveiled, and one of the most anticipated aspects of the budget was the announcement related to personal income tax rates. As it turns out, the government has decided to keep the income tax rates unchanged, providing a sense of relief to taxpayers across the country. 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 this means for individuals and their financial planning.
For those who may be unaware, the government had introduced a new tax regime in the previous budget, which offered an alternative to the existing old tax regime. The new regime was designed to be more simplified and taxpayer-friendly, with fewer deductions and exemptions available. However, the tax rates under the new regime were also different from those under the old regime.
Under the new tax regime, individuals are not required to pay tax on income up to ₹12 lakh, making it a significant tax-free slab. For income between ₹12 lakh and ₹16 lakh, the tax rate is 15%. The tax rate increases to 20% for income between ₹16 lakh and ₹20 lakh, and 25% for income between ₹20 lakh and ₹24 lakh. For income above ₹24 lakh, the tax rate is 30%. These tax rates have been left unchanged in the Budget 2026, which means that taxpayers who have opted for the new regime will continue to pay taxes according to these slabs.
On the other hand, the old tax regime has a different set of tax rates. Under this regime, income up to ₹2.5 lakh is tax-free, followed by a tax rate of 5% for income between ₹2.5 lakh and ₹5 lakh. The tax rate increases to 20% for income between ₹5 lakh and ₹10 lakh, and 30% for income above ₹10 lakh. Like the new regime, the tax rates under the old regime have also been left unchanged in the Budget 2026.
The decision to keep the income tax rates unchanged is likely to be welcomed by taxpayers, as it provides a sense of stability and predictability in their financial planning. However, some may have been hoping for a reduction in tax rates or an increase in the tax-free slab, which would have provided more relief to individuals and boosted consumer spending.
It’s worth noting that the government’s decision to maintain the status quo on income tax rates may be driven by the need to balance its fiscal priorities. The government has to manage its revenue and expenditure, and any significant changes to the tax rates could have a significant impact on its finances. Additionally, the government may be waiting to assess the impact of the new tax regime, which was introduced recently, before making any further changes.
In terms of what this means for individuals, the unchanged tax rates under both regimes mean that taxpayers will continue to plan their finances according to the existing tax slabs. Those who have opted for the new regime will continue to pay taxes according to the slabs mentioned earlier, while those who have chosen to remain in the old regime will continue to pay taxes according to the old tax rates.
Overall, the Budget 2026 has provided a sense of continuity and stability in terms of income tax rates. While some may have been hoping for more significant changes, the decision to maintain the status quo is likely to be welcomed by taxpayers who value predictability and stability in their financial planning.
In conclusion, the income tax rates under both the new and old tax regimes remain unchanged in the Budget 2026. The new regime offers a tax-free slab of up to ₹12 lakh, followed by tax rates of 15%, 20%, 25%, and 30% for different income slabs. The old regime, on the other hand, has a tax-free slab of up to ₹2.5 lakh, followed by tax rates of 5%, 20%, and 30% for different income slabs. The decision to keep the tax rates unchanged is likely to be welcomed by taxpayers, and provides a sense of stability and predictability in their financial planning.
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