If first 127 characters are same then why are we still using ASCII and is there backward compatibility issue when using Unicode instead of ASCII
ASCII, later called ANSI, has 1:1 relation between byte and character. Multibyte character systems, including Unicode, have the advantage of displaying additional character at the expense of requiring additional storage. In addition, there are many implementations of multibyte character systems; in some, the byte order is specified by the BOM. The interpretation of UTF-8, UTF-16 and UTF-32 produces different values for the same byte string. Further, there are different ISO standards for differing alphabets, such as the Scandinavian implementation with A-minuscule-o, as in "Åland Islands".
So, for simple database purposes, or for use with very limited storage, for example, ANSI has space advantages, and is not subject to misinterpretation. If one needs to display the full character set of many alphabets, though, multibyte sets are useful.