A Comparative Study Of Old And New Tax Regimes In India: Implications For Individuals And Businesses

Boobesh S, SASTRA deemed to be University

1) ABSTRACT:

The Indian taxation landscape underwent a significant transformation with the introduction of the new tax regime through the Finance Act, 2020, altering the conventional taxation structure established under the Income Tax Act, 1961. This transformative shift aimed to streamline tax structures, reduce complexities, and offer taxpayers a choice between the traditional system and a revised, simplified regime. This comparative study seeks to comprehensively analyse and contrast the intricate implications of the old and new tax regimes in India, emphasising their diverse impacts on individuals, businesses, administrative efficiency, compliance, and the wider economic framework. Through a meticulous review of extant literature, legislative documents, expert analyses, and economic data, this study intends to unravel the nuanced differences between the two tax regimes. The examination focuses on delineating the fundamental disparities in tax slabs, rates, deductions, exemptions, and their profound implications for various segments of taxpayers and businesses. Methodologically, this study employs a rigorous comparative analysis, anchored by legal provisions within the Income Tax Act and subsequent amendments, as the foundation for understanding the evolution and impact of taxation laws in India. The aim is to decipher the intricacies of transitioning between the old and new tax structures, elucidating the challenges, choices, and implications faced by taxpayers and businesses. The comparative assessment underscores the dilemma faced by individuals in choosing between regimes - balancing reduced tax rates under the new system against foregoing numerous exemptions and deductions available under the traditional regime. It explores the strategic recalibrations required by businesses in adapting to altered tax structures, aiming to optimize financial planning and compliance. This study, entrenched in the legal framework of Indian taxation, not only scrutinizes the direct implications for taxpayers but also delves into the broader implications for administrative efficiency, compliance behavior, and the macroeconomic landscape. By drawing insights from legal provisions and their impacts, this research aims to offer valuable policy recommendations for fostering an equitable, efficient, and adaptable tax framework in India. The findings from this comprehensive analysis serve as a critical guide for policymakers, practitioners, taxpayers, and stakeholders navigating the complexities and implications of the Indian tax framework. Ultimately, the study advocates for a nuanced understanding of the legal intricacies governing tax regimes to foster informed policy decisions and drive effective reforms aligning with the dynamic needs of India's evolving economy.

Keywords: Income Tax, Old vs New tax regime, income, individual, business, tax slabs, rates, deductions, exemptions