A COMPARISON BETWEEN OLD & NEW TAX REGIME OF INCOME TAX ACT, 1961 FOR SALARIED INDIVIDUALS
Keywords:Income Tax Act, 1961, Old tax regime, New tax regime, Salaried individuals, Budget 2023
This paper provides a comprehensive comparison between the old and new tax regimes under the Income Tax Act, 1961, with a specific focus on salaried individuals. The study aims to analyse the factors influencing the choice of tax regime, assess the implications of the chosen regime on tax liability, financial planning and savings of salaried individuals. The analysis begins with an overview of the recent changes in the tax landscape, particularly those introduced in the 2023 Budget. The paper explores the government's efforts to incentivize the transition to the new tax regime while retaining the flexibility for individuals to choose between the old and new systems. Key modifications, such as increased tax rebate limit, adjusted tax slabs and adjustments in surcharge rates are highlighted to make the new regime more appealing. A thorough comparison of the pros and cons of both tax regimes is presented, covering aspects such as tax slabs, standard deductions, deductions and exemptions, HRA, other allowances and the impact on savings and investments. The paper concludes with a detailed comparison table summarizing the differences between the old and new tax regimes.