New vs Old Tax Regime: The central government has presented its full budget, but this time, taxpayers did not receive any major relief. There were no changes to the tax slabs. Millions of people were eagerly awaiting announcements regarding tax slabs and exemptions, but Finance Minister Nirmala Sitharaman made no such announcements for taxpayers.

After a record ninth consecutive budget speech, it became clear that there were no changes to the income tax structure. The lack of relief in tax slabs has come as a shock to taxpayers. Therefore, it’s important to understand the new and old tax regimes. You can learn about which regime will save you more tax after Budget 2026 and other important related information.

Understanding the New and Old Tax Systems

The new tax system, introduced in 2020, will continue to run alongside the old system. This leaves taxpayers with the same old dilemma: choose the new system with lower tax rates but fewer exemptions, or the old system with higher tax rates but more deductions.

Over time, this decision has become even more complex. Ultimately, it depends entirely on your annual income and the amount of exemptions and deductions you can claim.

No Change in Tax Slabs

There have been no changes to the tax slabs. For FY 2026-27, the slabs in the new tax system have been retained without any changes. Income up to ₹4 lakh remains completely tax-free.

Income between ₹4 lakh and ₹8 lakh will be taxed at 5 per cent. Income between ₹8 lakh and ₹12 lakh will be taxed at 1 per cent. The tax slabs gradually increase, and the tax rate reaches per centent for income above ₹24 lakh.

No Tax on Income up to ₹12 Lakh

It’s important to note that the relief previously provided to taxpayers will continue this year as well. Resident individuals with an annual income of up to ₹12 lakh will receive a full tax rebate. This means the tax rate will be 0% on annual income up to ₹12 lakh.

For salaried taxpayers, this limit is even higher. Thanks to the standard deduction of ₹75,000, they can remain tax-free even with an income of up to ₹12.75 lakh.

Find out what’s best for whom

According to tax experts, the new tax system is significantly better for those with an annual income of up to ₹12 lakh. Under this system, the tax liability is completely zero. For higher earners, particularly those with an income of ₹24 lakh, the decision depends on the total amount of exemptions and deductions they are claiming. Furthermore, if the income is more than approximately ₹8 lakh, the old tax system might prove more beneficial in terms of tax savings.