The New Tax Regime is an optional income tax structure introduced in India under Section 115BAC of the Income Tax Act, effective from the financial year 2020–21. It offers lower slab rates for individuals and Hindu Undivided Families (HUFs) compared to the old regime, but with a significant trade-off—most exemptions and deductions (like HRA, LTA, standard deduction, etc.) are not available under this scheme.
This system was designed to simplify tax filing for taxpayers who prefer lower tax rates without the complexity of claiming multiple deductions or exemptions. From Assessment Year 2024–25 onwards, the New Tax Regime has become the default tax structure for salaried individuals and pensioners, although taxpayers still have the option to opt for the old regime if it suits them better.
In practical terms, choosing the right regime can impact your annual tax planning, TDS (Tax Deducted at Source) calculations by employers, and how you invest or spend to optimize your taxes. Business owners, freelancers, and salaried professionals must evaluate both regimes based on their income level and eligible deductions before filing their ITR (Income Tax Return).
If you're unsure about which regime to choose, FinTax24 offers expert guidance and digital solutions to help individuals and businesses make informed tax decisions. Learn more about income tax filing options under both regimes at FinTax24's Income Tax Solutions.
By understanding the structure and impact of the New Tax Regime, small business owners and first-time taxpayers can better align their tax compliance strategy with financial goals—making tax filing simpler, faster, and more transparent.