Evaluation Of The Dual Income Tax Regime In India: A Comparative Study Of Taxpayer Preferences

Abstract

This paper aims to examine the impact of India’s dual income tax system on the decision-making behavior of individual taxpayers. The primary aim of the study is to examine the behavior of salaried employees in choosing between the old tax regime and the new tax regime. The factors influencing their behavior would also be identified. This paper is based on a sample size of 200 salaried employees in Bangalore. The research design adopted in this paper is descriptive and analytical in nature. The primary data was collected through structured questionnaires. Relevant information was also collected through secondary sources. Statistical methods such as Chi-square tests, ANOVA tests, and correlation tests were employed to analyze the data.

The results show that the majority of the respondents still prefer the old tax regime because of the availability of deductions and exemptions. The new tax regime is preferred by those who prefer simple and easy tax compliance. The results also show that the level of income is one of the factors that affect the tax regime preference. There is a difference in the tax regime preference at different levels of income. Taxpayer awareness is also one of the factors that affect tax regime preference. Higher levels of tax awareness result in more confident decisions.

The results show that tax regime preference is affected by factors other than financial factors. Behavioral factors such as ease, familiarity, and risk also affect tax regime preference. Taxpayer education should be improved to help taxpayers make informed decisions in the dual tax system in India.