E-Paper
Union budget 2026: How income tax slabs changed over the years
From 11 tax slabs post-independence, the taxation system in India now has seven tax slabs under the New Tax Regime introduced in the Union Budget 2025.
As India awaits the Union Budget 2026, to be presented by finance minister Nirmala Sitharaman in the Parliament on Sunday, February 1, taxpayers are keenly watching for possible changes to the income tax, levied by the central government.
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India's tax history dates back to the post-independence era, when the income tax had 11 tax slabs. Over the years, consecutive governments have revised the taxation system, and India now has seven tax slabs under the New Tax Regime introduced in the Union Budget 2025.
Here is a look at how income tax slabs have been revised in the Union Budgets over the last two decades:
Income tax slabs in the 1994-95 budget
Dr Manmohan Singh, as the finance minister of the country, revised the income tax slabs as he reduced the slabs to three, the lowest ever.
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The first slab was set at ₹35,000 to ₹60,000 at 20% tax; the second slab was set at ₹60,000 to ₹1.2 lakh at 30% tax; and for incomes above 1.2 lakh, the tax rate was 40%.
Income tax slabs in 1997-98
During this budget, Congress's P Chidambaram was the finance minister, and he presented the ‘Dream Budget’.
For incomes between ₹40,000 and ₹60,000, a 10% tax rate was imposed, followed by a 20% rate for incomes between ₹60,000 and ₹1.5 lakh. For those earning above ₹1.5 lakh, the tax rate was set at 30%.
Income tax slabs in 2005-2006
The tax slabs underwent revisions again in the budget 2005-2006, and were a surprise for taxpayers, as those earning up to ₹1 lakh were exempted from paying taxes. For those earning ₹1 lakh to ₹1.5 lakh, a 10% tax rate was imposed, and 20% for those with income between ₹1.5 lakh and ₹2.5 lakh. Those earning over ₹2.5 lakh were placed in the 30% tax slab.
Income tax slabs in 2010-2011
The next finance minister, Pranab Mukherjee, further revised the tax slabs, placing those earning between ₹1.6 lakh and ₹5 lakh in the 10% slab, followed by the 20% slab for those earning between ₹5 lakh and ₹8 lakh. Those earning over ₹8 lakh were to pay a 30% tax.
Income tax slabs in 2012-2013
The lower slab of the income tax slab was further expanded by the then finance minister Pranab Mukherjee, and those earning up to ₹2 lakh were exempted from paying taxes. Those earning ₹2 lakh to ₹5 lakh were placed in the 10% tax slab, those earning between ₹5 lakh and ₹10 lakh in the 20% slab, and those earning ₹10 lakh and above in the 30% slab.
Income tax slabs in 2014-2015
This budget abolished the wealth tax with the Finance Bill 2015. The wealth tax was replaced by a 2% surcharge on the super-rich with taxable income above ₹1 crore.
Income tax slabs 2017-2018
Those earning up to ₹3 lakh were exempted from paying taxes, and those earning between ₹3 lakh and ₹3.5 lakh were to pay a tax of ₹2,500.
Income tax slabs in 2018-2019
During this time, the interim finance minister, Piyush Goyal, revised the tax slabs and exempted those earning up to ₹5 lakh from paying taxes.
Income tax slabs in 2019-2020
The tax slabs remained unchanged.
Income tax slabs in 2020-2021
Under the revised slabs of the New Tax regime in this budget, the tax slabs exempted incomes under ₹2.5 lakh from paying taxes. For those between ₹2.5 lakh to 5 lakh, the tax was 5%, 10% for ₹5,00,001 to ₹7.5 lakh,15% for ₹7,50,001 to ₹10 lakh, 20% for ₹10,00,001 to ₹12.5 lakh, 25% for ₹12,50,001 to ₹15 lakh and 30% above ₹15 lakh.
Tax slabs in 2023-2024
In 2024, the finance minister introduced significant changes to the personal income tax system, including multiple reforms. The Centre also revised tax slabs under the new tax regime, offering taxpayers a potential annual saving of about ₹17,500.
In the 2024 Union Budget, the finance minister also increased the standard deduction ceiling from ₹50,000 to ₹75,000, and from ₹15,000 to ₹25,000 for family pensioners under the new tax regime.
Income tax slabs in 2025-2026
In the budget if 2025-2026, those earning up to ₹4 lakh were exempted from paying taxes, 5% for ₹4 lakh to 8 lakh, 10% for ₹8 lakh to ₹12 lakh, 15% for Rs12 lakh to Rs16 lakh, 20% for ₹16 lakh to ₹20 lakh, 25% for ₹20 lakh to ₹24 lakh, and 30% for ₹24 lakh above.
