The difference between the New Tax Regime and the Old Tax Regime in India primarily revolves around tax rates and exemptions/deductions:
Old Tax Regime:
- Higher Tax Rates: It has higher tax rates compared to the new regime.
- Deductions and Exemptions: Taxpayers can claim various deductions (like Section 80C, 80D) and exemptions (like HRA, LTA), reducing taxable income.
New Tax Regime:
- Lower Tax Rates: It offers lower tax rates across income slabs.
- No Deductions and Exemptions: Most deductions and exemptions available under the old regime are not allowed. Taxpayers benefit from lower rates but lose out on tax-saving options.
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