A Study of Income Taxpayers’ Perception Towards the Selection of Tax Regime: Old Regime vs New Regime

This systematic literature review demonstrates that taxpayers' attitudes regarding the choice between the old and new income tax regimes in India are influenced by a multifaceted interplay of financial utility, behavioral inclination, perceived simplicity, and normative convictions concerning equity. The new system has clearly changed from being an optional reform to a key part of India's personal tax system. Recent budget measures and official guidance show that the government is still moving toward a policy of simplification, lower taxes, and more acceptance of the new system. The literature also makes it clear that taxpayers don't always react to tax changes in a straightforward way. Their decisions are based on their past habits, how they save money, what society expects of them, and how comfortable they feel with their own thoughts. The old system is still important because it fits with the way many families, especially those who use deductions and exemptions, plan their finances. The new system is more appealing when there aren't many deductions, the paperwork is hard, or it's very important to make it easy to follow the rules. So, neither regime can be seen as better than the other in terms of how people see things; different groups of taxpayers prefer one over the other for different reasons. This insight is useful because it changes the policy discussion from "which regime is better?" to "for whom, under what conditions, and why?" The answer is as much about how taxpayers think as it is about how taxes work. The review also shows that being aware of something and actually understanding it are not the same thing. A lot of taxpayers know that there are two systems, but not as many are sure that they are making the best choices. This makes it possible to misunderstand things, depend too much on heuristics, and rely on middlemen. So, policymakers and administrators need to improve comparative guidance, calculators that are easy to use, communication that is clear, and efforts to teach people about money. As the new regime becomes more and more the default choice, informed consent and decision support become important parts of a fair tax system. Finally, the literature indicates that the discourse regarding tax regime selection transcends mere revenue generation or computational simplicity. It concerns the nature of the relationship the government desires taxpayers to maintain with taxation, saving, and compliance. A good tax reform should make things easier for people without hurting their long-term financial health, and it should make people feel more confident without making them worry about making decisions. Future research must transcend rudimentary comparative tables and investigate regime choice as a behavioral and institutional phenomenon. In that sense, how taxpayers see things is not a minor issue; it is key to the success of tax reform in India today.

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