Definition
Section 115BAC New Tax Regime
The new tax regime offers lower income-tax slab rates in exchange for forgoing most exemptions and deductions, available as an optional alternative to the old regime.
Introduced to simplify personal taxation, the new tax regime provides lower slab rates but removes most common deductions and exemptions such as those for specified investments and allowances. Taxpayers can choose between this and the old regime based on which leaves them with a lower bill.
The government has progressively made the new regime more attractive and positioned it as the default, while retaining a few benefits like the standard deduction. The choice depends on how much an individual claims in deductions, making personalised computation essential.
Related terms
- Revenue Foregone (Tax Expenditure)Revenue foregone, or tax expenditure, is the estimated revenue the government gives up by granting exemptions, deductions and concessional rates.
- Advance TaxAdvance tax is income tax paid in instalments during the financial year as income is earned, rather than in a lump sum after the year ends.
- Set-Off and Carry Forward of LossesThese rules let taxpayers adjust losses against income of the same or future years, subject to conditions on the type of loss and how long it can be carried forward.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.