The Union Budget 2026, presented by Finance Minister Nirmala Sitharaman, marks a major turning point for every taxpayer in India. This year, the focus wasn't just on changing numbers, but on making the entire system easier for you to understand. With the introduction of the New Income Tax Act, 2025, the government has simplified the rules and made the New Tax Regime the automatic choice for everyone. Whether you are a salaried professional, a small business owner, or a senior citizen, these changes are designed to put more money in your pocket and reduce the paperwork headache.

The Big News: No New Slabs, but Better Benefits

First, the simple truth: The Tax Slabs (the percentages you pay based on your income) did not change. If you were paying 10% tax last year, you are still paying 10% this year.

However, the government introduced a brand new law called the New Income Tax Act, 2025. This law doesn't change how much you pay, but it makes the rules much easier to read and the forms much easier to fill out.

The -Zero Tax- Goal: Who pays ₹0?

This is the most important part for the middle class. Under the New Tax Regime (which is now the -automatic- choice for everyone):

• Standard Deduction: If you have a salary, the first ₹75,000 of your income is -invisible- to the taxman. You don't pay tax on it.

• The ₹12 Lakh Rule: Because of a special discount (called a Rebate), if your final taxable income is up to ₹12 lakh, your tax becomes Zero.

• The Result: If your total salary is up to ₹12.75 lakh, you effectively pay NO INCOME TAX at all.

Comparing the Two Ways (Regimes)

In India, you can choose between two ways to calculate your tax. Think of it like a menu:

The New Way (New Tax Regime)

Best for: People who don't want to save receipts or invest in special schemes just to save tax.

• Pro: You pay lower tax rates overall.

• Con: You cannot use receipts (like Rent, LIC, or School Fees) to reduce your tax further.

• Standard Deduction: ₹75,000.

The Old Way (Old Tax Regime)

Best for: People with big Home Loans or those who pay very high House Rent (HRA).

• Pro: You can use your investments (LIC, PPF, Rent) to lower your taxable income.

• Con: The tax rates are much higher.

• Standard Deduction: ₹50,000.

The New Tax Slabs (At a Glance)

Since most people now use the -New Way,- here is the simple table showing how much you pay:

Note: Even if you are in a higher bracket, you only pay tax if your income stays above ₹12.75 lakh after your ₹75,000 deduction.

5. Other Good News for Your Pocket

• Foreign Travel & Study: If you send money abroad for a child's education or a family trip, the extra tax (TCS) has been cut to a flat 2%. It used to be as high as 20%!

• Fixing Mistakes: If you make a mistake in your tax form, you now have until March 31 of the next year to fix it without a huge penalty.

• Accident Money: If someone receives money from a -Motor Accident Claim,- that money is now 100% tax-free.

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