A significant shift in India’s income tax filing pattern has emerged, with approximately 6 crore income tax returns (ITRs) filed for the financial year 2023-24. Notably, 70% of these returns were submitted under the new simplified tax regime, according to Revenue Secretary Sanjay Malhotra.
Shift from Old Regime
In his address at the post-budget session of the PHD Chamber of Commerce and Industry, Malhotra highlighted that there had been initial doubts about whether taxpayers would transition to the new tax regime. However, the high uptake of this new system indicates a positive reception.
The new tax regime, introduced to simplify the tax process, offers lower tax rates compared to the previous regime but provides fewer exemptions and deductions. Malhotra emphasized that the move towards this regime aims to reduce compliance burdens and make the tax system more straightforward for individuals.
For the previous fiscal year 2022-23, a total of 8.61 crore ITRs were filed. This year’s substantial shift reflects the growing acceptance of the new tax regime’s benefits.
Looking ahead, the government plans to undertake a comprehensive review of income tax laws as outlined in the recent Budget. Malhotra noted that a draft of the revised tax laws will be released soon, and public suggestions will be sought to further refine the tax system.
Currently, India operates under two personal income tax regimes: the older system with higher rates but more exemptions, and the new regime with reduced rates but fewer deductions. The government’s push towards simplification underscores its commitment to easing the tax compliance process for taxpayers.