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New Delhi: For the last two years, the government has been continuously trying to ensure that more and more taxpayers adopt the new tax regime leave the old tax regime. For this, the tax structure has been simplified and many types of reliefs have been given in the new regime. The impact of these changes is also visible because a large number of people have opted for the new tax regime. Now before the Budget 2026, it is being speculated that the government can make the new tax regime more attractive.
Since the year 2019, the government has worked towards changing the income tax system gradually. There were various exemptions and deductions in the old tax regime, which complicated the system. The new tax regime had low tax rates and a simple structure to make it easier for common taxpayers to understand and adopt.
For the first time in Budget 2020, the new tax regime was introduced as an alternative. After this, it was made the default tax regime in the budget 2023. The government eased the tax slab and reduced the surcharge. It has brought relief to both middle class and high-income taxpayers.
In the budget 2025, the government made a big announcement under the new tax regime. Under the new regime, income of up to Rs 12 lakh has been made tax free. This limit reached Rs 12.75 lakh after standard deduction for salary earners. This reduced the tax burden on the middle class considerably and the new tax regime became more attractive.
According to government data, a total of 7.28 crore income tax returns were filed in the assessment year 2024-25. Of these, 5.27 crore returns were under the new tax regime. That is to say, about 72 percent of taxpayers adopted the new tax regime, while only 28 percent of the people remained in the old tax regime.
| Details | Figures |
|---|---|
| Total Income Tax Returns filed | 7.28 crore |
| Returns under the new tax regime | 5.27 crore |
| Share of the new tax regime | 72 percent |
| Returns under the old tax regime | 2.01 crore |
| Share of Old Tax Regime | 28 percent |
The government has also made major reforms in tax administration. Faceless assessment and faceless appeal system were implemented so that taxpayers do not have to travel around the offices. Apart from this, it has been announced to remove the old income tax law and introduce a new Income Tax Act, which may come into force from 1 April 2026.
Considering the trend of the last two years, it is believed that the government can further strengthen the new tax regime in the budget 2026. Even if there is no major reduction in tax rates, changes in the slab or additional relief can be given. The government clearly indicates that the new tax regime will become the main tax system in the future and the old tax regime may end gradually.
