A Comparative Analysis of India’s New and Old Tax Regimes: Implications for Taxpayers and Economic Equity

Taxation is an important aspect of economic policy, influencing individual financial choices and national revenue generation. India's tax structure was revolutionized by the implementation of a new tax regime, which eliminates the complexity of tax rates but eliminates the majority of deductions. The change in policy offers taxpayers a choice between taking up the new regime or staying in the old system, which maintains deductions but is more intricate. This paper makes a comparative evaluation of both tax regimes, examining their structure, effect on various income groups, and overall economic effects. Through scenario-based simulations, the research estimates differences in tax liability and potential gains for taxpayers. The results indicate that although the new tax regime simplifies compliance, the old regime is still more desirable for those who effectively use deductions. These insights can assist policymakers in refining tax structures for greater equity and efficiency.