Budget 2026 has brought no relief for taxpayers on the income tax front. Finance Minister has announced that there will be no change in income tax slabs, meaning taxpayers will continue to pay tax under the existing Old and New Tax Regimes until further revisions. However, important announcements were made regarding the implementation of the new Income Tax Act (IT Act 2025) and extensions related to return filing.
In Budget 2026, taxpayers did not receive any relief in terms of income tax slabs. The Finance Minister did not announce any modification to the existing slab structure. As a result, the current tax rates under both the Old Tax Regime and the New Tax Regime will continue to apply.
At present, taxpayers can choose between the Old Tax Regime, which offers multiple deductions and exemptions, and the New Tax Regime, which provides lower tax rates but fewer deductions.
During the Budget speech, the Finance Minister also made a significant announcement regarding the Income Tax Act (IT Act 2025), stating that the new law will come into effect from April 1, 2025. Additionally, the government announced extensions related to revised returns and deadlines for filing ITR-1 and ITR-2.
Under the Old Tax Regime, annual income up to ₹2,50,000 remains completely tax-free.
Up to ₹2,50,000: Nil (No Tax)
₹2,50,001 to ₹7,00,000: 5%
₹7,00,001 to ₹10,00,000: 10%
₹10,00,001 to ₹12,00,000: 15%
₹12,00,001 to ₹15,00,000: 20%
Above ₹15,00,000: 30%
This regime is preferred by taxpayers who claim deductions under Section 80C, 80D, home loan interest, and other exemptions.
The New Tax Regime offers a higher basic exemption limit but fewer deductions.
Up to ₹3,00,000: Nil (No Tax)
₹3,00,001 to ₹7,00,000: 5%
₹7,00,001 to ₹10,00,000: 10%
₹10,00,001 to ₹12,00,000: 15%
₹12,00,001 to ₹15,00,000: 20%
Above ₹15,00,000: 30%
In recent years, the New Tax Regime has undergone major revisions, and currently, income up to ₹12.75 lakh effectively attracts zero tax due to rebates and standard deductions.
With no changes announced in Budget 2026, questions remain about future tax relief. Salaried individuals are hopeful that the government may gradually phase out the Old Tax Regime. However, a large section of taxpayers continues to rely heavily on deductions under Sections 80C, 80D, and home loan benefits, making the Old Regime relevant for now.