A Research Paper on “A Comparative Study of New Tax Regime Vs Old Tax Regime in India”

The Indian income tax system underwent a major transformation with the introduction of the New Tax Regime, aimed at simplifying the tax structure by offering reduced tax rates while eliminating most exemptions and deductions available under the Old Tax Regime. This reform was intended to provide taxpayers with greater flexibility and ease of compliance; however, it has also created confusion among individuals regarding which regime is more financially beneficial. This study undertakes a comparative analysis of the Old and New Tax Regimes in India to examine their structural differences and assess their implications on tax liability across various income levels. The primary objective of this research is to identify which categories of taxpayers gain the most benefit under each tax regime by evaluating tax burdens at different income slabs. The study compares tax liabilities under both regimes by considering multiple scenarios, including taxpayers who actively claim deductions and those with minimal or no deductions. By analyzing these variations, the research identifies income groups for whom the New Tax Regime offers a greater financial advantage due to lower tax rates, as well as those who benefit more from the Old Tax Regime through exemptions such as standard deduction, house rent allowance, and investments under Section 80C. The findings of this study provide valuable insights into the suitability of each tax regime based on income level and deduction utilization, thereby aiding taxpayers, policymakers, and financial planners in understanding the practical impact of India’s dual tax system.