The default income tax system offering lower tax rates but removing most exemptions and deductions.
The New Tax Regime offers lower tax rates but removes almost all deductions and exemptions available under the Old Regime — no HRA or LTA exemption, no Section 80C benefit. It became the default regime, meaning employees must actively opt out to use the Old Regime instead.
It tends to benefit employees who haven't committed to long-term tax-saving investments or home loans, since the lower slab rates outweigh the value of exemptions they'd otherwise claim.
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