Quick Summary
As the Union Budget 2026 draws closer, India's personal income tax framework appears to be heading toward a decisive transformation. Signals emerging from Budget 2025 indicate a clear policy intent to accelerate the transition toward the New Tax Regime, with further incentives likely to encourage ta
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FAQ :
Budget 2026 is expected to accelerate the transition towards the New Tax Regime, potentially making it the default option for individuals by offering further incentives.
In Budget 2025, the basic exemption limit was raised to Rs 4 lakh, and a standard deduction of Rs 75,000 was introduced for salaried individuals and pensioners, effectively eliminating tax up to Rs 12.75 lakh annual income.
The New Tax Regime is highly popular, with approximately 72% of the 7.28 crore income tax returns filed for Assessment Year 2024-25 opting for it.
Middle-income taxpayers, particularly those earning between Rs 7.5 lakh and Rs 25 lakh annually, see the most significant tax savings and benefits under the revised New Tax Regime.
While high-income earners do receive tax savings, the percentage benefit tends to decline as income rises above Rs 30 lakh, suggesting the regime is strategically designed for greater relative benefits for middle-income earners.
Tax experts suggest Budget 2026 could bring further rationalisation of tax slabs or introduce additional rebates to strengthen the appeal of the New Tax Regime.
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