[9] IMPACT OF THE NEW INCOME TAX REGIME ON INDIVIDUAL TAXPAYERS: A COMPARATIVE STUDY OF TAX LIABILITY AND TAX-SAVING BEHAVIOUR : How to Cite : Mruthunjaya A (2026). Impact Of the New Income Tax Regime on Individual Taxpayers: A Comparative Study of Tax Liability and Tax-Saving Behaviour. International Journal of Multidisciplinary Research & Reviews, 5(9), 94-106.  https://doi.org/10.56815/ijmrr.v5i9.2026.94-106

Mruthunjaya A

Authors

Mruthunjaya A Faculty Member, H. C. Boraiah Memorial SC/ST First Grade College, Challakere Road, Jagalur Taluk, Davangere District, Karnataka, India

Abstract

The introduction of the concessional New Tax Regime under Section 115BAC of the Income Tax Act, 1961, and its designation as the default regime from Assessment Year 2024-25, represents one of the most significant structural changes to India’s personal income tax system in recent years, offering individual taxpayers lower slab rates in exchange for foregoing most exemptions and deductions. This study empirically examines the impact of the New Tax Regime on individual taxpayers, comparing tax liability and taxsaving behaviour between the Old and New regimes. Using a structured questionnaire administered to 386 individual taxpayers selected through stratified convenience sampling, the study collects self-reported tax liability under both regimes and measures a composite Tax-Saving Behaviour Score capturing participation in Section 80C, 80D, HRA, home loan interest, and NPS tax-saving instruments. Paired-samples t-tests, independent-samples ttests, correlation analysis, multiple regression, and chi-square tests are employed to test the hypotheses. Findings indicate that mean tax liability under the New Regime is significantly lower than under the Old Regime across all income slabs (paired t = 18.62, p < 0.05), and that New Regime adopters report a significantly lower Tax-Saving Behaviour Score (mean = 42.8) than those retaining the Old Regime (mean = 71.4, independent t = 21.47, p < 0.05), indicating a measurable decline in tax-linked investment activity. Amount of tax saved and simplicity of compliance emerge as the strongest predictors of regime choice, while complexity of comparative calculation and lack of awareness remain the leading barriers to informed regime evaluation. The study concludes with policy and advisory implications for taxpayers, tax practitioners, and policymakers.