Impact of old and new tax regimes on Indian taxpayer’s

The introduction of the New Tax Regime in India, announced in the Union Budget 2020-21, marked a significant shift in the country’s personal income tax structure. It offered taxpayers lower tax rates with minimal exemptions and deductions, in contrast to the Old Tax Regime, which followed a higher rate structure but provided numerous tax-saving incentives. This study examines the impact of both regimes on government revenue collection, analysing trends in direct tax receipts, compliance behaviour and taxpayer preferences since the implementation of the New Regime. Using secondary data from the Ministry of Finance, the Income Tax Department, and the Comptroller and Auditor General (CAG) reports, the research compares revenue growth patterns and assesses whether the simplified structure has met its intended objectives of broadening the tax base and increasing voluntary compliance. Preliminary findings suggest that while the New Tax Regime has simplified filing processes, its uptake remains moderate, and revenue outcomes are influenced by taxpayer awareness, demographic factors, and retention of deductions under the Old Regime. The study provides policy recommendations to balance taxpayer convenience with sustainable revenue growth for the government.