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 sense of relief for taxpayers across the country. In a significant move, the government has decided to keep the personal income tax rates unchanged, providing a much-needed breather to individuals who were expecting a hike in tax rates. In this blog post, we will delve into the details of the income tax rates under the new and old tax regimes, highlighting the key differences and similarities between the two.
New Tax Regime: A Recap
Introduced in 2020, the new tax regime was designed to simplify the tax structure and reduce the compliance burden on taxpayers. Under this regime, income up to ₹12 lakh is tax-free, making it an attractive option for individuals with lower incomes. The tax slabs under the new regime are as follows:
- 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
The new tax regime is optional, and taxpayers can choose to opt for it or continue with the old regime. The new regime is more beneficial for those who do not have significant deductions to claim, such as home loan interest, medical expenses, or charitable donations.
Old Tax Regime: A Comparison
The old tax regime, on the other hand, has been in existence for decades and provides a more traditional approach to taxation. Under this regime, the tax slabs are as follows:
- 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
The old regime provides more deductions and exemptions, making it more beneficial for individuals with significant expenses, such as home loan interest, medical bills, or charitable donations. However, it also comes with a more complex tax structure, requiring taxpayers to navigate through various forms and returns.
Key Differences between New and Old Tax Regimes
The key differences between the new and old tax regimes lie in the tax slabs and the deductions available. The new regime has a more simplified tax structure, with fewer tax slabs and no deductions available. In contrast, the old regime has more tax slabs and provides a range of deductions, making it more beneficial for individuals with significant expenses.
Another significant difference between the two regimes is the tax-free limit. Under the new regime, income up to ₹12 lakh is tax-free, while under the old regime, the tax-free limit is ₹2.5 lakh. This makes the new regime more attractive for individuals with lower incomes.
Impact of No Changes in Tax Rates
The government’s decision to keep the personal income tax rates unchanged is expected to have a positive impact on the economy. With no changes in tax rates, individuals can plan their finances better, and businesses can make more informed investment decisions. The move is also expected to boost consumer spending, as individuals will have more disposable income at their disposal.
Conclusion
In conclusion, the income tax rates under the new and old tax regimes remain unchanged, providing a sense of relief to taxpayers across the country. The new regime continues to be an attractive option for individuals with lower incomes, while the old regime remains beneficial for those with significant expenses. As the economy continues to grow, it is essential for taxpayers to understand the tax structure and plan their finances accordingly. With the government’s decision to keep tax rates unchanged, individuals can look forward to a more stable and predictable tax environment.
For more information on the Budget 2026 and the 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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