The new tax regime slab follows the structure shown above. The tax rates are lower but there are also fewer deductions and exemptions available.

Under the old tax regime, tax rates are higher but there are several exemptions and deductions available. It includes tax slabs ranging from 2.5% to 30% based on income. But under the new tax regime, tax rates are lower, with slabs starting from 0% to 30%, but there are fewer deductions and exemptions available.

The old tax regime encourages savings by offering various deductions and exemptions, such as those under Section 80TTB, which benefit senior citizens. In contrast, the new tax regime simplifies the tax filing process with lower tax rates, particularly benefiting individuals in lower-income slabs, though it offers fewer deductions and exemptions.

According to the Income Tax Department, “The option to choose between two regimes may vary from person to person. It is advisable to do a comparative evaluation and analysis under both regimes and then choose as per requirement. Taxpayers can broadly estimate and compare tax liability under the new and the old tax regime using the Income and Tax Calculator on the Income Tax Portal.”

It is often advised to take the help of tax experts before opting for one of the two options available. It is crucial to inform the employer of your chosen tax regime to make sure that the correct tax is deducted at source — TDS — from your salary.