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, the government has decided to keep the personal income tax rates unchanged, leaving many wondering what this means for their financial planning. 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 taxpayers.
For those who are unaware, the Indian government introduced a new tax regime in 2020, which offered an alternative to the existing old tax regime. The new tax regime came with its own set of tax slabs and rates, which were designed to be more streamlined and efficient. However, the old tax regime was also retained, giving taxpayers the option to choose between the two.
Under the new tax 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
On the other hand, the old tax regime has the following tax rates:
- 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
As we can see, the new tax regime offers a more gradual increase in tax rates, with a higher tax-free limit of ₹12 lakh. However, the old tax regime offers more tax deductions and exemptions, which can be beneficial for certain individuals.
The decision to keep the income tax rates unchanged is likely to be a relief for many taxpayers, as it provides a sense of stability and predictability. However, it also means that those who were hoping for a reduction in tax rates will have to wait another year.
It’s worth noting that the government has not made any changes to the tax slabs or rates, which means that taxpayers will have to continue to navigate the same tax structure as before. This may require some adjustments to their financial planning, especially for those who were expecting a reduction in tax rates.
In terms of the impact on different income groups, the unchanged tax rates are likely to have a minimal effect on those with lower incomes. However, for those with higher incomes, the lack of a tax cut may be a disappointment. Additionally, the decision to retain the old tax regime means that taxpayers will continue to have the option to choose between the two regimes, which can be beneficial for those who are able to take advantage of the various tax deductions and exemptions available.
Overall, the decision to keep the income tax rates unchanged is a neutral move by the government, which is likely to have a minimal impact on the overall economy. However, it’s always important for taxpayers to stay informed and plan their finances accordingly, taking into account the tax rates and slabs that apply to their individual circumstances.
In conclusion, the income tax rates under the new and old tax regimes remain unchanged, with the new regime offering a more gradual increase in tax rates and a higher tax-free limit. Taxpayers will need to continue to navigate the same tax structure as before, and plan their finances accordingly. For more information on the budget and its implications, readers can visit the news source below.
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