Income Tax Latest News 2026: After Budget 2026, a major question lingered in the minds of millions of taxpayers: whether the government was going to discontinue the old tax system completely. Addressing this doubt, Ravi Agarwal, Chairman of the Central Board of Direct Taxes (CBDT), clarified that there is currently no intention to abolish the old tax system.
Although data suggests that approximately 88 percent of individual taxpayers have now transitioned to the new tax system, the government is not planning to introduce a sunset clause. This means that taxpayers will retain the freedom to choose between the two options based on their convenience and financial planning.
Old Tax System
While the new tax system is gaining popularity, the old system remains a safety net for millions of taxpayers. Experts believe that for those who have taken out large home loans and receive substantial interest rebates under Section 24(b), the old system is a better option.
Additionally, those who invest disciplinedly in schemes like PF, PPF, and life insurance under Section 80C, or whose salary structure includes a significant portion of HRA and LTA, enjoy greater tax savings under the old system. This is a lifeline for those who have planned their investments with long-term financial goals in mind.
Growing Popularity of the New Tax Regime
The growing popularity of the new tax regime is primarily due to its simplicity and low tax rates. This system is especially ideal for young professionals and new employees who want to avoid the hassle of gathering investment documents and complex calculations.
Under the new system, income up to ₹12 lakh has been made tax-free, and after the standard deduction of ₹75,000, there is effectively no tax on income up to ₹12.75 lakh. The tax filing process is significantly simplified, as taxpayers are no longer required to submit proof of investment, thereby reducing the time required to file income tax returns.
Gradual Change
The government believes that instead of abruptly discontinuing the old system, it should be allowed to continue until it loses its relevance. As people’s old home loans are repaid and old investment patterns change, the need for the old system will naturally diminish.
This will be a natural process, where the new generation will choose the new system, while the older generation will be able to continue to benefit from the old system until their investment commitments are fulfilled. The government’s aim is not to disappoint taxpayers but to provide them with a flexible framework where they can make the best decisions based on their financial situation.
Vikram Singh
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