Budget Likely to Boost New Tax Regime

Finance Minister Nirmala Sitharaman will present the Union Budget for 2026–27 next week. Many taxpayers are closely watching what the government will decide about the old and new personal income tax systems. While a major change is not expected, signs show that the government may continue to promote the new tax regime.

The government is not likely to remove the old tax regime completely. However, it may make the new regime more attractive by offering more benefits. Tax expert CA Dr Suresh Surana said the government is expected to slowly encourage people to shift to the new system instead of forcing them to change suddenly. He added that the old regime will stay for now, but small changes could make the new regime more appealing over time.

The new tax regime was introduced in the 2020–21 Budget as an alternative to the old system. It offers lower tax rates but removes many exemptions and deductions. Over the past five years, more people have started using the new regime, but many salaried employees still prefer the old one.

For several taxpayers, the lower tax rates are not enough to make up for the loss of deductions. These deductions include savings for retirement, health insurance, and home loans, which are important for long-term financial security. Because of this, many people continue to stick with the old tax system.