What are Income Tax rates under new & old tax regime as govt made no changes this year?
The Budget 2026 has been announced, and one of the most eagerly awaited aspects of the budget was the changes to the income tax rates. However, in a surprise move, the government has decided to keep the personal income tax rates unchanged. This means that the tax slabs and rates that were introduced in the previous year will continue to apply in the new financial year as well.
For individuals who opt for the new tax regime, the income tax rates are as follows: income up to ₹12 lakh is tax-free, followed by a tax rate of 15% for income between ₹12 lakh and ₹16 lakh. The tax rate increases to 20% for income between ₹16 lakh and ₹20 lakh, 25% for income between ₹20 lakh and ₹24 lakh, and 30% for income above ₹24 lakh.
On the other hand, individuals who opt for the old tax regime will be taxed as follows: 0% tax up to ₹2.5 lakh, 5% tax for income between ₹2.5 lakh and ₹5 lakh, 20% tax for income between ₹5 lakh and ₹10 lakh, and 30% tax for income above ₹10 lakh.
The decision to keep the income tax rates unchanged is likely to bring relief to taxpayers who were expecting an increase in tax rates due to the economic conditions. The government’s move to maintain the status quo on income tax rates is also seen as a positive step to boost economic growth and increase consumer spending.
The new tax regime was introduced in 2020, with the aim of simplifying the tax structure and reducing the number of tax exemptions. The new regime has fewer tax exemptions and deductions compared to the old regime, but it also has lower tax rates. The government has been encouraging taxpayers to opt for the new regime, as it is seen as more efficient and easier to administer.
However, the old tax regime still has its advantages, particularly for individuals who have made significant investments in tax-saving instruments such as life insurance, provident fund, and public provident fund. These investments can help reduce the taxable income and lower the tax liability.
The decision to keep the income tax rates unchanged is also likely to have a positive impact on the stock market, as it will boost investor sentiment and increase consumer confidence. The government’s move to maintain the status quo on income tax rates is seen as a prudent decision, given the current economic conditions.
In the previous year, the government had introduced several changes to the tax structure, including the introduction of a new tax slab and changes to the tax rates. However, this year, the government has decided to keep the tax rates unchanged, which is likely to bring relief to taxpayers.
The income tax rates in India are as follows:
New Tax Regime:
- Income up to ₹12 lakh: 0% tax
- Income between ₹12 lakh and ₹16 lakh: 15% tax
- Income between ₹16 lakh and ₹20 lakh: 20% tax
- Income between ₹20 lakh and ₹24 lakh: 25% tax
- Income above ₹24 lakh: 30% tax
Old Tax Regime:
- Income up to ₹2.5 lakh: 0% tax
- Income between ₹2.5 lakh and ₹5 lakh: 5% tax
- Income between ₹5 lakh and ₹10 lakh: 20% tax
- Income above ₹10 lakh: 30% tax
In conclusion, the government’s decision to keep the income tax rates unchanged is likely to bring relief to taxpayers and boost economic growth. The new tax regime continues to offer lower tax rates, while the old tax regime still has its advantages, particularly for individuals who have made significant investments in tax-saving instruments. As the economy continues to grow and develop, it will be interesting to see how the government’s tax policies evolve in the coming years.
For more information on the Budget 2026 and the income tax rates, you can visit the official government website or consult a tax expert. The government’s decision to keep the income tax rates unchanged is a positive step, and it will be interesting to see how it impacts the economy and taxpayers in the coming year.
About the Author
