Will old tax regime be scrapped in Budget 2026?
What's the story
In the last six years, the Indian government has made significant changes to its tax policies. The new tax regime was introduced in Budget 2020 with lower rates for those willing to give up deductions and exemptions. By Budget 2023, it became the default option. In Budget 2025, zero tax was announced for individuals earning up to ₹12 lakh under this new regime, raising speculation about phasing out or making the old one redundant. So, what's the future? Let's see.
Predictions
Old tax regime likely to be phased out gradually
As Budget 2026 is presented today, experts are divided on the fate of the old tax regime. Some believe it could be phased out gradually, making way for a transition to the new system. CA Pratibha Goyal from PD Gupta & Company said, "The old tax regime is likely to be phased out soon... Going forward, most income-tax-related changes are likely to focus on alignment and transition."
View
Effective tax rate under new regime lower than old one
CA Manish Golyan from Gupta Jai & Company echoed Goyal's views, saying the government may partially or fully remove old regime slabs or deductions due to cases of wrongful claims. He added that even after considering deductions and claims, the effective tax rate under the new regime is much lower than that under the old one.
Tax debate
Not all experts agree on phasing out prediction
However, not all experts are on board with this prediction. Some believe that the old tax regime won't be phased out completely as the New Income Tax Act, introduced in 2025, mentions both regimes. CA Chirag Chauhan from CA Chauhan & Company said, "I don't believe that the old tax regime would be phased out completely because the new I-T Act mentions both regimes."