Difference between Old Tax Regime and 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

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 80DDB 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

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.

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