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Before Budget 2026, the discussion is intense whether the government will stop the old tax regime when 80 to 90 percent of the taxpayers have switched to the new tax regime. Experts say that such a step can directly affect the savings, home loans and financial planning of the middle class. Therefore, the government will not take any decision in haste and both the systems are expected to continue working together.
New Delhi. With the arrival of Budget 2026, the hottest discussion is whether the old tax regime will now be completely discontinued. According to government data, about 80 to 90 percent of taxpayers have already shifted to the new tax regime. In such a situation, the question is that when most of the people have come to the new system, can the government take a big decision to end the old system in the next budget?
Tax experts believe that the trend has definitely changed but it will not be easy to abolish the old tax regime in one go. Many families’ savings schemes, home loan interest, house rent allowance and deductions like 80C are based on this system. Financial planning for many years is made according to these discounts. In such a situation, if the old regime is suddenly stopped then it can affect everything from middle class budget to loan EMI.
Why is there talk of abolishing the old regime?
The new tax regime has been promoted very aggressively in the last two years. It has been given a low tax slab and simple structure, due to which the youth and salaried class have increasingly come to this model. The aim of the government is to simplify the tax system so that return filing and paper hassles are reduced. After 80 to 90 percent people have shifted, the logic of keeping the old system running seems to be weakening.
Why experts are saying it should not be stopped immediately
Tax consultants say that millions of families in India base their entire saving strategy on tax deductions. The old tax regime motivates them to invest. In this, the relief given on things like PPF, home loan interest, health insurance gives a big secure cushion to the middle class. If it is removed suddenly, there could be a risk of decline in everything from the housing market to the insurance sector.
What decision can the government take next?
The government may be considering removing the old regime but it is likely that this decision will not be taken soon. It is more likely that both systems will continue to run together for some time so that people can gradually transition to a completely new system. The Finance Ministry is also watching what effect the abolition of the old regime will have on the savings rate because domestic savings are considered the backbone of India’s economy.
