New Tax Regime

[4] The latest changes were presented in the Union Budget 2023-24 which brought five significant changes in the earlier existing (FY 2022–23) income tax policy.

[6] The notion that millennial generation exhibit a proclivity towards spending rather than saving appears to have seemingly prompted the implementation of this New Tax Regime framework to boost consumption thereby helping combat the deceleration of economic growth during the time.

[7] The Union Budget proposed a simplified personal income tax regime aimed at providing substantial relief to individual taxpayers and streamlining the Income-Tax law.

[1] Union Minister for Finance and Corporate Affairs Nirmala Sitharaman revealed the government's intention to withdraw all Income-Tax exemptions in the long run.

Individuals or HUFs opting for New Tax Regime are not entitled to exemptions for leave travel, house rent, among others under the section 115BAC of the IT Act.

[9] Individuals who were at the outset of their professional journey starting anew and yet are interested in a streamlined approach found this New Tax Regime attractive.

[10] This regime appeared to provide benefits to taxpayers who reside with their parents, those who are debt-free of home loan, and those who do not have any deduction instruments under Chapter IV-A.

As per expert analysis, tax-advantaged retirement savings instruments had significant popularity among middle-class taxpayers which made the old regime look more appealing.

Terminating an existing commitment such as a life insurance policy, after enrollment may prove challenging for taxpayers due to potential financial losses.

Additionally, in the wake of the COVID-19 pandemic many taxpaying individuals have recognized the significance of having insurance, which is eligible for deduction in Old Tax Regime.

This announcement provides a definitive indication of the government's intentions regarding taxation, and suggests a shift towards a more fiscally responsible approach that prioritizes public investment over tax incentives.