A Comparative Analysis of India's New Tax Regime: Legislative Changes, Taxpayer Impact and the Evolution of the Income-Tax Framework

Abstract

Since the alternative income-tax regime under Section 115BAC was introduced in 2020, India has moved through five successive revisions of its slab structure and, from 1 April 2026, a wholesale re-codification of the statute into the Income-tax Act, 2025. Existing literature on the old-versus-new regime choice treats this as a static comparison, drawing on hypothetical case studies or early survey data that predate both the regime's later liberalisation and the 2025 Act's commencement. This paper addresses that gap through a doctrinal analysis grounded in the primary text of both statutes, read alongside Central Board of Direct Taxes filing data and official revenue estimates rather than secondary summaries. It distinguishes two threads frequently conflated: the substantive liberalisation of new-regime rates, the standard deduction, and the Section 87A/156 rebate between 2020 and 2026, and the purely structural consolidation achieved by the Income-tax Act, 2025, which reproduces the same rates under new section numbers without policy change. The paper evaluates both against filing data showing new-regime adoption rising from roughly 70 per cent of individual filers in Assessment Year 2023-24 to an estimated 88 per cent or more in the current cycle, against an estimated revenue cost of approximately ₹1,00,000 crore in a single budget year. It argues that while the new regime has succeeded in its stated aims of simplification and voluntary compliance, this has come at a measurable cost to the savings-linked deduction ecosystem the old regime was designed to encourage. The 2025 Act's own claim to reducing litigation, moreover, rests on clearer drafting rather than a changed tax base, a distinction the existing literature has not yet examined.