Impact of Union Budget Tax Policies on Individual Taxpayers in India and the Role of Tax Planning in Reducing Tax Liability under the Indian Income Tax System

Impact of Union Budget Tax Policies on Individual Taxpayers in India and the Role of Tax Planning in Reducing Tax Liability under the Indian Income Tax System

Dr. Batani Raghavendra Rao, Vignesh Gopi, Khushi J Jain, Arjun M, Adusumilli Prudhvi Raj, Achuthya Rao L, MD Saquib Naushad

Professor, MBA students 2025-27 batch

Faculty of Management Studies, CMS Business School

JAIN (Deemed-to-be-University)

CMS Business School

Bangalore, India

ABSTRACT:

India’s personal income tax system allows the taxpayer to choose between the old tax regime and the new tax regime, which were designed with the intention of achieving different objectives. The old tax regime was designed with the intention of encouraging individuals to save and make investments in instruments like provident funds, insurance, home loans, and education. On the other hand, the new tax regime, introduced in the Union Budget 2020 in India, aims to simplify the income tax system for individuals by reducing the rates and removing the exemptions and deductions. This study aims to provide a comparative study of the old and new income tax regimes in terms of their structure, rates, benefits, drawbacks, and their overall impact on individuals belonging to different income brackets. This study aims to analyse the overall impact of individual financial behaviours, investments, and income levels in choosing one of the income tax regimes. Although the old income tax regime is beneficial for individuals who make the most of the exemptions and deductions, the new income tax regime is beneficial for individuals who want to simplify the income tax compliance process. Key words: Old Tax Regime, New Tax Regime, Tax Slabs, Financial Planning.