Usually, changes in tax slabs are announced during the Union Budget. However, in Budget 2026, Finance Minister Nirmala Sitharaman did not introduce any revisions to the current slab rates under either the old or new tax regime.
No revision in Income Tax slabs
The notified provisions under the Income Tax Act, 2025, and the Income-tax Rules, 2026, confirm that there has been no change in tax slabs from April 1. Under the new tax regime, salaried individuals are eligible for a standard deduction of ₹75,000.
Under the old tax regime, annual income up to ₹2.5 lakh remains exempt from tax. Income between ₹2.5 lakh and ₹5 lakh continues to attract 5% tax, while earnings between ₹5 lakh and ₹10 lakh are taxed at 20%. Income above ₹10 lakh remains taxable at 30%.
Under the new tax regime, income up to ₹4 lakh remains tax-free. Earnings between ₹4 lakh and ₹8 lakh attract 5% tax, while higher income brackets are taxed progressively from 10% to 30%.
New tax regime continues as default option
The new tax regime continues to remain the default option for taxpayers under the updated framework. The regime is aimed at simplifying taxation by offering lower tax rates with fewer deductions and exemptions.
However, many salaried individuals still prefer the old tax regime because it allows them to claim benefits. Taxpayers should compare both systems carefully before making a switch, especially if they have significant investments or deductions.
What changed under the new rules?
The Central Board of Direct Taxes (CBDT) notified the Income-Tax Rules, 2026, on March 20 as part of the implementation of the Income Tax Act, 2025. According to a gazette notification, “These rules may be called the Income-tax Rules, 2026. They shall come into force on April 1, 2026.”
Why taxpayers should compare both regimes carefully
At first glance, the new tax regime appears attractive because of its lower tax rates and simplified structure. Many salaried individuals earning up to ₹12.75 lakh may effectively end up paying zero income tax after rebates, while several non-salaried taxpayers earning up to ₹12 lakh could also benefit.
While the new regime reduces tax rates, it also removes many exemptions and deductions that taxpayers traditionally use to reduce taxable income.
In some cases, allowances and perquisites available under both systems may help taxpayers save more under the old regime despite higher slab rates. Because of this, taxpayers evaluate salary structures, exemptions, deductions, and long-term investments before deciding which regime suits them better.
