Budget 2026 did not change the income tax slabs. Good news if you were worried about a surprise. But it did change capital gains rules, and that matters if you invest in stocks or mutual funds. Let me break this down for you in plain English.
First, the new regime slabs. Nil up to Rs 4 lakh. Then 5% for Rs 4 to 8 lakh. Then 10% for Rs 8 to 12 lakh. Then 15% for Rs 12 to 16 lakh. Then 20% for Rs 16 to 20 lakh. Then 25% for Rs 20 to 24 lakh. And 30% for anything above Rs 24 lakh. The rebate under Section 87A means if your total income is up to Rs 7 lakh, you pay nothing. That is a big relief for a lot of people.
On capital gains, here is what changed. Equity short-term capital gains, when you sell stocks or equity funds within a year, stays at 20%. Long-term capital gains on equity, when you hold for more than a year, is 12.5% with a Rs 1.25 lakh exemption per year. So the first 1.25 lakh of your LTCG is tax-free. Beyond that, you pay. One more thing. Buyback proceeds are now taxed as capital gains. Companies used to do buybacks as a way to return money to shareholders without the dividend distribution tax. That loophole is closed. No more tax arbitrage there.
Now, the question everyone asks. New regime or old regime? In my opinion, for most salaried people without a home loan and without big 80C investments, the new regime wins. Here is why. The new regime has lower slab rates. You give up 80C, 80D, 80CCD(1B), home loan interest deduction, and a bunch of others. But if your total deductions were not that high to begin with, the lower rates more than make up for it. The math is simple. Run both scenarios in your tax calculator. Whichever leaves you with less tax payable, pick that one.
Who should stick with the old regime? If you have a big home loan and you are claiming 2 lakh in interest deduction every year, the old regime might work better. If you are maxing out 80C with PPF, ELSS, and insurance, plus 80D for health, plus 80CCD(1B) for NPS, your deductions could be 3 lakh or more. In that case, the old regime can save you money. Same for people with a lot of interest income from FDs or savings accounts. The old regime lets you deduct that under certain conditions. The new regime does not.
Here is what I would do. Sit down with your Form 16 and your investment statements. Add up all your deductions. Then run the tax calculation for both regimes. It takes 10 minutes and it will tell you exactly which one to choose. Do not assume. I have seen people stick with the old regime out of habit and end up paying more tax. And I have seen people switch to the new regime without checking and lose money. The default for salaried employees is now the new regime, so if you do nothing, that is what you get. Make sure that is actually the right choice for you.
One last thing. The new regime is simpler. No need to track 80C investments, no need to worry about proof of deduction. For a lot of young earners who do not have a home loan or a big PPF balance yet, that simplicity is worth something. Less paperwork, less stress. Just file and move on. I think that is underrated.