New Tax Regime vs. Old Tax Regime: A Detailed Comparison

A comparison of the old and new tax regime slabs and rates are shown in the following table.

As you can see, the new system will impose a 10% tax on income between Rs. 5 lakh and Rs. 7.5 lakh and a 15% tax on income between Rs. 7.5 lakh and Rs. 10 lakhs. On the whole range for the current regime, this was 20% flat. With rates of 20% for Rs. 10–12.5 lakh, 25% for Rs. 12.5 lakh–15 lakh, and 30% for Rs. 15 lakh and beyond, the former Rs. 10 lakhs+ slabs where you paid 30% have been divided into three parts.

The above list is not exhaustive as there are many more tax deductions and exemptions that are allowed under the old tax regime but not under the new tax regime. Additionally, do remember, there are different limits up to which tax deductions can be claimed for each of the above options even under the old tax regime. You can use an income tax calculator to determine how much deduction you can claim in the case of each of these tax-saving investments and deductions.

• Under Section 80CCD (2), your employer may contribute up to 10% of your salary for investment in NPS (or up to 14% of your basic + DA if you work for the Central Government).
• If a dwelling is rented out, a standard deduction of 30% of net rental income is allowed.
• Employees of Divyang will be eligible for a transportation allowance exemption to cover daily travel costs between their place of employment and home.
• A transportation allowance shall be given to cover the cost of the conveyance required to carry out the official task.
• The personnel will be given allowances to cover the expense of their travel while on tour or during a transfer.

The daily allowance is given for regular daily expenses in the event of absence from the employee's usual place of duty.

As you can see if no deductions are claimed, the amended new tax regime of 2023 with its lower income tax slab rates leads to significantly less tax liability. You can easily double check this calculation using the free online income tax calculator .

However, let’s see what happens if tax saving investments of Rs. 2 lakh i.e. Rs. 1.5 lakh using Section 80C investment options along with an additional Rs. 50,000 u/s 80CCD (1b) are made under the old tax regime. Do remember these deductions are not available under the new tax regime. This is what the tax liability will look like in this case:

As you can see, even if a tax payer decides to avail tax saving investment benefits of up to Rs. 2 lakh as shown above, the amended new tax regime for FY 23-24 still results in significantly lower tax liability even though no tax saving investments are considered in the case of the latter. You can replicate all the above calculations and also calculate your tax liability under the two different tax regimes using an online income tax calculator .