Union Budget 2026: With just a few weeks left until the Union Budget 2026, Finance Minister Nirmala Sitharaman will present the budget for the next financial year in Parliament on February 1st. This will be her ninth consecutive budget. In recent years, the government has focused on simplifying and reforming the tax system, which is why taxpayers are eagerly awaiting the announcements on Budget Day.
New Tax Regime Introduced in Budget 2020
The new income tax regime was first introduced in the Union Budget 2020. Initially, many taxpayers did not show much interest in it, but the situation has changed over time. The government has continuously made changes to make the new tax regime more beneficial, and as a result, a large number of people are now adopting it. Therefore, it is speculated that a significant decision regarding the old tax regime may be taken in Budget 2026.
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What’s Special About the New Tax Regime?
The new tax regime offers relatively lower tax rates, but in return, most exemptions and deductions are not available. This system is designed for those who typically do not use investments or various deductions to save on taxes. Under this system, popular deductions like Section 80C, 80D, and 24B cannot be availed, while these facilities are available in the old tax regime.
New Tax Regime Becoming More Attractive
The government has taken several major decisions to make the new tax regime more popular. In the Union Budget 2024, the standard deduction for salaried individuals was increased to Rs. 75,000, from the earlier Rs. 50,000. Additionally, income up to Rs. 12 lakh per annum is tax-free under the new tax regime. After the changes in tax slabs, the basic exemption limit has also increased to Rs. 4 lakh per annum.
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Increasing Taxpayer Participation
The impact of these government measures is clearly visible. In the assessment year 2023-24, approximately 72 percent of individual taxpayers opted for the new tax regime. Experts believe that this figure has now reached around 80 percent. This clearly indicates that people’s interest in the new tax regime is continuously increasing.
No changes in the old tax regime
While the new tax regime has been continuously improved, the old tax regime has not seen any major changes for a long time. Taxpayers have been demanding an increase in the limits of deductions available under Sections 80C, 80D, and 24B, but the government has not yet taken any steps in this direction. Experts believe that the government will not announce the abolition of the old tax regime for now, but by not adding any new benefits to it, taxpayers will gradually move away from it on their own.