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 anticipated aspects of the budget was the changes to the personal income tax rates. However, the government has decided to keep the income tax rates unchanged, providing relief to taxpayers. In this blog post, we will delve into the details of the income tax rates under both the new and old tax regimes.
The new tax regime, which was introduced in 2020, provides an option for taxpayers to choose between the old and new tax regimes. The new regime offers lower tax rates, but it also comes with certain restrictions, such as the inability to claim certain deductions and exemptions. Under the new regime, 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, the old tax regime offers a more traditional approach to taxation, with a tax rate of 0% up to ₹2.5 lakh, 5% for income between ₹2.5 lakh and ₹5 lakh, 20% for income between ₹5 lakh and ₹10 lakh, and 30% for income above ₹10 lakh. The old regime also allows taxpayers to claim various deductions and exemptions, such as the deduction for housing loan interest, medical expenses, and charitable donations.
The decision to keep the income tax rates unchanged is a welcome move for taxpayers, as it provides stability and predictability. The government’s decision to maintain the status quo is also a reflection of its commitment to supporting the economy and promoting growth. With the income tax rates remaining unchanged, taxpayers can continue to plan their finances and make informed decisions about their investments and expenses.
It is worth noting that the new tax regime has been designed to be more simplified and taxpayer-friendly. The regime offers a lower tax rate, but it also restricts the ability to claim deductions and exemptions. This means that taxpayers who opt for the new regime will have to carefully consider their financial situation and determine whether the lower tax rate outweighs the loss of deductions and exemptions.
In contrast, the old tax regime offers more flexibility and allows taxpayers to claim a wider range of deductions and exemptions. However, the tax rates under the old regime are higher, which can result in a higher tax liability. Ultimately, the choice between the new and old tax regimes depends on the individual taxpayer’s circumstances and financial goals.
The government’s decision to keep the income tax rates unchanged is also a reflection of its efforts to promote economic growth and stability. With the economy facing various challenges, including inflation and global economic uncertainty, the government’s decision to maintain the status quo provides a sense of stability and predictability. This can help to boost business and consumer confidence, which is essential for promoting economic growth.
In conclusion, the income tax rates under the new and old tax regimes remain unchanged, providing relief to taxpayers. The new regime offers a lower tax rate, but with restrictions on deductions and exemptions, while the old regime offers more flexibility, but with higher tax rates. Taxpayers must carefully consider their financial situation and determine which regime is best for them. With the government’s decision to maintain the status quo, taxpayers can continue to plan their finances and make informed decisions about their investments and expenses.
As the economy continues to evolve, it is essential to stay informed about the latest developments and changes to the tax laws. The government’s decision to keep the income tax rates unchanged is a welcome move, and taxpayers must take advantage of this stability to plan their finances and achieve their financial goals.
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