The Indian government has announced a new tax slab in the Union Budget for 2020–21. The government did not abolish the previous tax system; this new tax slab is sometimes referred to as an optional tax regime. The option for the taxpayer is to select the tax regime—either the old or the new. Compared to the previous tax structure, the new tax regime features a lower tax bracket. The option for the taxpayer is to select either the new tax structure with lower tax slabs or the previous tax structure with higher tax slabs but tax benefits. The previous tax system allowed taxpayers to make use of existing tax breaks such as the house rent allowance, leave travel allowance, and other deductions allowed by the Income Tax Act of 1961. The advantages of the current exemptions and deductions that are offered under the old tax regime will not be available to individuals who choose the new tax regime. The new tax system has a lower tax rate and six tax slabs, compared to the old tax system's higher tax rate and three tax slabs. In both tax regimes, the tax rate for individual under 60 is comparable because they are exempt up to 2.5 lakh. Additionally, individuals who are residents of India for income tax purposes are eligible to claim a tax rebate of up to Rs. 12,500 against their tax liabilities under Section 87A, provided taxable income does not exceed Rs. 5, 00,000.