Budget 2026: Is the Old Income Tax Regime Nearing Its End? What Experts Say

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Budget 2026: Is the Old Income Tax Regime Nearing Its End? What Experts Say

As Finance Minister Nirmala Sitharaman prepares to present Union Budget 2026, attention is shifting to the future of the old income tax regime. While it is unlikely to be scrapped immediately, experts say the government is steadily nudging taxpayers towards the simplified new tax regime.

Published by Somesh | February 01, 2026

With Union Budget 2026 set to be presented shortly, speculation is growing over the fate of the old income tax regime. Although no abrupt policy changes have been signalled, recent reforms indicate a clear and sustained push towards the new income tax regime, which emphasises simplicity, fewer exemptions and easier compliance.

Over the past few years, the government has consistently streamlined personal taxation by reducing deductions and exemptions, making tax filing less complex for most individuals. The new regime reflects this approach by offering lower tax rates in exchange for the removal of multiple exemptions that traditionally required detailed tax planning.

Tax experts believe any changes announced in Budget 2026 will further strengthen the new tax framework rather than reverse course. Amendments, if introduced, are expected to remain within the structure of the new regime to encourage wider adoption among taxpayers.

Despite this shift, the old tax regime is not expected to be phased out immediately. Many taxpayers continue to benefit from deductions, exemptions and carried-forward losses available only under the old structure. Experts note that these taxpayers will likely be allowed to continue under the old regime until such benefits are gradually neutralised.

Data also shows a clear behavioural shift, with a majority of taxpayers now opting for the new regime. With standard deductions available across both systems and simplified rules improving take-home pay for many salaried individuals, the new regime is increasingly seen as the default choice. For now, the government appears focused on enabling a smooth, voluntary transition rather than enforcing an abrupt switch.