New Tax Regime
Definition
The simplified tax regime introduced in Budget 2020, made default from FY 2024-25. Offers lower tax rates but with minimal deductions. Standard deduction of ₹75,000 allowed. Best for those with deductions below ₹3.75 Lakh.
Why is New Tax Regime Important?
Navigating the Indian tax system requires a clear understanding of terms like New Tax Regime. With the introduction of the new income tax regime alongside the old one, taxpayers must evaluate their deductions, exemptions, and tax brackets carefully. This concept is a key component in optimizing your tax liabilities under the Income Tax Act and GST framework.
Proper tax planning using this metric can help individuals and businesses maximize their take-home income while remaining fully compliant with government regulations. We provide free tax calculators to help you estimate these figures accurately and make informed decisions before filing your returns.
What is the New Tax Regime?
The New Tax Regime (introduced in Budget 2020, updated in Budget 2023 and 2024) offers lower income tax rates but removes most deductions and exemptions available in the old regime. It is now the default regime — you must actively opt out to choose the old regime.
New vs. Old Regime Comparison
| Feature | New Regime | Old Regime |
|---|---|---|
| Basic exemption | ₹3,00,000 | ₹2,50,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| Section 80C | Not available | Up to ₹1.5L |
| Section 80D | Not available | Up to ₹75,000 |
| HRA exemption | Not available | Available |
| Section 24(b) | Not available (self-occupied) | Up to ₹2L |
| Rebate u/s 87A | Up to ₹7L income | Up to ₹5L income |