The new financial year, FY26, has already started. With this new financial year comes the new Tax regime, which has a big difference in terms of many things. The government has recently rolled out several incentives to promote the adoption of the new tax regime. These measures indicate a clear intent to encourage taxpayers to shift to the new system, with the long-term goal of phasing out the old regime. While the new regime is now the default option, the old one will still remain available for the time being. Speaking to News24, Professor RK Gupta addressed various questions regarding the new and old tax regimes.
New Tax Regime:
| Income Range | Income Tax Rate |
|---|---|
| Up to Rs 4 lakh | NIL |
| Rs 4 lakh – Rs 8 lakh | 5% |
| Rs 8 lakh – Rs 12 lakh | 10% |
| Rs 12 lakh – Rs 16 lakh | 15% |
| Rs 16 lakh – Rs 20 lakh | 20% |
| Rs 20 lakh – Rs 24 lakh | 25% |
| Above Rs 24 lakh | 30% |
Old Tax Regime:
The old tax regime in India represents the conventional taxation system that offers taxpayers a range of deductions and exemptions to lower their taxable income. These benefits cover investments in tax-saving instruments such as the Public Provident Fund (PPF), National Pension Scheme (NPS), insurance premiums, and house rent allowance, among others. Under this regime, the tax structure is progressive, meaning that tax rates rise as an individual’s income increases.
| Income Tax Slab (₹) | Income Tax Rate (%) |
|---|---|
| 0 – 3,00,000 | 5% |
| 3,00,001 – 7,00,000 | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
What Is The Aim Of Government With This New Tax Regime?
Professor RK Gupta mentioned, “The aim of the government is that the public should have more money for consumption. Because among the taxes levied by the government, one is a direct tax and the other is an indirect tax. Old slabs, ranging from 10 to 30%. The government said that it will create such a system in which the public will have more money. Because the public will have more money and they will spend it, we also get 18% GST. It will remain a source of income, and the asking power in the market will be high.”
Which One Is Better, Old Or New Tax Regime?
Professor RK Gupta stated, “In the old system, 10% tax is levied on income between Rs 7 lakh to 10 lakh. In the new tax regime, there is 0 tax on Rs 12 lakh. Apart from this, there is a standard deduction of Rs 75,000, and you get an exemption in that too. In a way, they will not have to pay any tax up to Rs 12,75,000. The new system has simplified things. Now the simple calculation is Rs 12,75,000 with zero tax.”
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What Old Regime Give?
According to Professor RK Gupta, “The old regime was for those people who had deductions under section 80, like 80A, 80D. Those who invested money in PPFs were getting an exemption under 80C. Those who will follow the old system will not get the exemption of standard deduction, and those who follow the new system will get the exemption.”
He also mentioned, “You will not get any exemption in the new regime, like you used to get earlier in 80C. The government has abolished all these exemptions in the new regime.”
Why People Will Move With The New Regime?
According to Professor RK Gupta, “The new system has simplified things. Now the simple calculation is Rs 12,75,000 with zero tax. If someone wants to go back to the old system, they will not get this much exemption due to the gap that has come up, so in the end, they will give up and adopt the new regime. Because of this gap, no one will like the old regime. This new regime has brought benefits for every category.”
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