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Home > Income Tax > Help Center > Old vs New Tax Regime Last Updated: Dec 08th 2023

Difference between Old Tax Regime and New Tax Regime

Budget 2020 has introduced the new tax regime for FY 2020-21 in addition to the old tax regime. FY 2020-21 onwards the taxpayer can choose the best tax regime based on the tax saving potential, practicality, and immediate needs.



Difference between Old Tax Regime and New Tax Regime

This document covers

  1. Rates of taxes and Tax Slabs Comparison
  2. Availability of Deductions
  3. Increased take home Salary
  4. Reduced compliances and Paperwork
  5. How to select which Tax Regime is right ?
  6. Exemptions and Deductions available under New Tax Regime

1. Rates of taxes and Tax Slabs Comparison

The new regime provides for concessional rates of taxes for multiples slabs whereas old regime provides for standard rates of taxes

From FY 2023-24 (per Budget 2023)

S.NoSlab Tax Rates
1Upto Rs 3,00,000Nil
2From Rs 3,00,001 to Rs 6,00,0005%
3From Rs 6,00,001 to Rs 9,00,00010%
4From Rs 9,00,001 to Rs 12,00,00015%
5From Rs 12,00,001 to Rs 15,00,00020%
6More than Rs 15,00,00030%
Individuals and HUF opting New Regime u/s 11BAC are not liable to Alternate Minimum Tax (AMT)


From FY 2020-21 to FY 2022-23

S.NoSlab Tax Rates
1Upto Rs 2,50,000Nil
2From Rs 2,50,001 to Rs 5,00,0005%
3From Rs 5,00,001 to Rs 7,50,00010%
4From Rs 7,50,001 to Rs 10,00,00015%
5From Rs 10,00,001 to Rs 12,50,00020%
6From Rs 12,50,001 to Rs 15,00,00025%
7More than Rs 15,00,00030%
Individuals and HUF opting New Regime u/s 11BAC are not liable to Alternate Minimum Tax (AMT)


2. Availability of Deductions

The new tax regime does not allow the taxpayer to avail certain deductions and exemptions whereas the old regime provides that the taxpayer can claim deductions and exemptions which are available to him.

Some of the deductions that the taxpayers will be loosing if they select the new regime are

  1. Standard Deduction of Rs 50000 (upto FY 2022-23). For FY 2023-24, Budget 2023 has extended the benefit of standard deduction Rs. 50,000
  2. House Rent Allowance (HRA)
  3. Leave Travel Allowance (LTA)
  4. Entertainment Allowance
  5. Professional Tax (PT)

  6. Interest paid on Housing Loan u/s 24
  7. 80C Deductions like LIC, Home Loan Principal, PPG, NSC etc
  8. 80D Deduction i.e., Health Insurance paid for self and family
  9. 80DD and 80U related to Disability
  10. Interest paid on Education loan u/s 80EE
  11. Donations u/s 80G , 80GGA, 80GGC

3. Increased take home Salary

New Tax Regime provides an opportunity to increase the take home salary of the taxpayer and is not required to invest upfront, whereas the old tax regime reduce take home as the taxpayers is required to invest in certain long-term investments to avail the benefits.

4. Reduced compliances and Paperwork

Under New tax regime, the taxpayer need not worry about the documentation and compliances as most of the exemptions and deductions are not available. Whereas the taxpayers under old regime need to have all the proofs, and in many cases the employee need to submit such proofs to the employer for claiming deductions and exemptions

   AROUND THE WORLD

Due to privacy issues, generally the employers in other major countries do not consider your other income in calculating TDS or withholding tax.

But in India with the Old Tax Regime, often times, employers go overboard in asking more information than it's really needed. This not only puts burden on employer and it's HR department / function but also crosses the line of what's actually needed and what's being asked.

Hence, new tax regime in a way stop this practice and to have the employee takes care of the taxes for salary and any other income or investments.



5. Which Tax Regime to be Selected?

There is a lot of confusion regarding which regime to pick. But selecting the right regime helps in optimization of taxes and wealth creation in future. The Taxpayer needs to evaluate both the regimes depending on the income, deductions, exemptions etc and select the right regime.

The tools available to correctly select the right tax regime are to use an 1) Old vs New Tax Calculator or 2) Taking an Expert Tax Consultation from EZTax.in to review, suggest the correct one.



Income Tax Calculator

Choose Old or New tax regime using Income Tax Calculator that compare side by side

Visit Tax Calculator

Expert Tax Consultation

Get Expert Tax Consultation Online to speak to you and prepare, identify the right tax regime

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6. Exemptions and Deductions available under New Tax Regime


  1. W.e.f Apr 01st 2023, Standard Deduction of Rs 50000 if you have salary or pension income.
  2. Deduction u/s 80CCD (2) (Employer contribution to NPS)
  3. Deduction u/s 80JJAA (Additional employee cost). This is applicable for business.
  4. Transport allowances in case of Specially abled persons
  5. Travelling Allowance granted to meet the cost of travel on tour or on transfer u/s 10(14)
  6. Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty
  7. Conveyance Allowance granted to meet the expenditure incurred on conveyance in performance of duties of the office


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Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.