International Journal on Science and Technology

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Volume 16 Issue 4
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Understanding the Differences Between the Old and New Tax Regimes in India: Benefits and Challenges for Salaried Earners

Author(s) Dr. Ashique Elahi
Country India
Abstract Abstract
The introduction of the new income tax regime in the Union Budget 2020, followed by substantial revisions in Budget 2023, has brought a transformative change to India’s personal taxation landscape. Unlike the long-established old regime, which incorporated more than seventy deductions and exemptions such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and deductions under Sections 80C, 80D, and 24(b), the new regime emphasizes simplicity, transparency, and reduced tax rates. By eliminating most exemptions, the new system aims to offer an uncomplicated and flexible tax structure with lower compliance requirements.
This paper undertakes a detailed comparison between the two regimes, focusing specifically on salaried taxpayers. It examines the structural differences, financial implications, and behavioural outcomes associated with each regime. Furthermore, the study uses breakeven analysis to evaluate conditions under which taxpayers should opt for one regime over the other. Findings suggest that while the old regime remains advantageous for individuals claiming substantial deductions and with long-term saving objectives, the new regime benefits those seeking higher liquidity, reduced documentation, and simpler compliance.
Keywords Keywords: Income Tax Act 1961, Old Tax Regime, New Tax Regime, Section 80C, Section 87A, Deductions and Exemptions, Salaried Taxpayers.
Field Arts
Published In Volume 16, Issue 4, October-December 2025
Published On 2025-12-05
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