Understanding the new tax regime
July 6, 2024
The new tax regime is an income tax scheme that was introduced in the Union Budget 2020.
The new scheme was launched to simplify the process of paying taxes and expand the taxpayer base in India.
Under the new regime, taxpayers have to pay a lower tax percentage while forgoing most deductions and exemptions available under the old regime.
The new regime is beneficial for those who earn up to ₹9 lakh annually and don’t want to claim tax deductions.
From financial year 2023-24, the new tax regime has become the default one. Taxpayers have to fill the Form 10-IEA if they wish to opt for the old regime.
The new tax regime applies uniform tax rates to all individual and HUF taxpayers, in contrast to the old regime which had different tax rates based on their ages.
Along with the standard deduction, exemption on leave encashment, gratuity, and employer's contribution to NPS are also available in the new regime.
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