 | « Back to article | Print this article |
'Most young taxpayers prefer income tax filing to be flexible yet straightforward.'
Around 55 million income taxpayers may have opted for the new tax regime for the ongoing financial year, according to revenue department's preliminary estimates.
Most of these taxpayers, according to a senior government official, have a taxable income of up to Rs 7 lakh.
The Centre overhauled the new tax regime in the 2023-2024 Budget, making it relatively attractive.
The new regime, which seeks to eliminate specific tax deductions and exemptions but offers a lower rate of taxation, struggled to gain traction since its introduction in the financial year 2020-2-21.
"We don't see a reason why 55 million won't shift to the new tax regime. Most young taxpayers, earning around Rs 750,000 to Rs 800,000, or even up to Rs 10 lakh prefer income tax filing to be flexible yet straightforward," said the official.
"They are also willing to experiment to see if the new regime works for them. They always have the option to shift to the old regime in the next financial year," said the official.
The exact number of those opting for the new tax regime would only be known by the next assessment year (2024-2025), which would reflect the current financial year's earnings and tax dues.
According to the income-tax department's data for FY23, a total of 48.4 million taxpayers had a taxable income up to Rs 5 lakh, over 11.2 million had a taxable income of in the range of Rs 5 lakh to Rs 10 lakh, 4.7 million had a taxable income between a Rs 10 lakh and Rs 20 lakh.
As many as 2 million fell in the income group category of Rs 20 lakh (Rs 2 million) to Rs 50 lakh (Rs 5 million), while 380,000 earned between Rs 50 lakh and Rs 1 crore (Rs 10 million).
There were only 260,000 taxpayers in the above Rs 1 crore category.
The number of income-tax returns (ITR) filed touched an all-time high of 67.7 million in AY 2023-2024 -- 16 per cent more than the total ITRs filed (58.3 million) a year ago.
The number of tax filing by the end of FY23, however, was 78 million. This financial year, too, the number of tax filing is expected to go up.
The department said that it received nearly 5.37 million ITRs from first-time filers.
Earlier, the 2023-2024 Union Budget tweaked the optional exemption-free tax regime, which is available under Section 115BAC of the I-T Act.
The revamped concessional tax regime was also made the default regime for an individual taxpayer.
Under the new tax regime, there will be no tax for those with an annual income of up to Rs 7 lakh. A standard deduction of Rs 50,000 has also been allowed and the basic exemption limit hiked to Rs 3 lakh.
After the new regime came into effect on April 1, employers sought details from employees about their preferred tax regime for tax deduction purposes.
Those who did not intimate the employer would see TDS from salary based on the revamped regime, according to a chartered accountant.
"If the government's initial estimates come true, it will be more than 50 per cent shift to the new tax regime," he said, adding the tax department may have an internal assessment on the basis of TDS filing in the current financial year.
"The new generation have different options for investment and savings which are not necessarily linked with tax-saving tools. The proportion of savings for tax purposes showed a reduction," Revenue Secretary Sanjay Malhotra said during his interview after the Budget announcement.
More than 50 per cent will switch to the new regime, he said.
If you have any questions about I-T returns, do ask rediffGURUs.
Meet the rediffGURU Tax Experts.
Mihir Tanna has more than 10 years of experience in direct taxation, including filing income tax returns.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).
Ask Mihir Tanna your question HERE.
Hardik Parikh is a chartered accountant with over 15 years of experience in taxation, accounting and finance.
He holds an MBA degree from IIM-Indore and heads his own advisory firm, Hardik Parikh Associates LLP.
Ask Hardik Parikh your question HERE.
Tejas Chokshi has over 20 years of experience in financial planning, income tax planning, strategic and risk advisory, banking and financial products and accounting and auditing.
He is an information system auditor, a forensic auditor and concurrent bank auditor.
Tejas has a master’s degree in management, audit and accounting from Gujarat University and has completed his CA from the Institute of Chartered Accountants of India.
Ask Tejas Chokshi your question HERE.
Vivek Lala has been working as a tax planner since 2018. His expertise lies in making personalised tax budgets and tax forecasts for individuals. As a tax advisor, he takes pride in simplifying tax complications for his clients using simple, easy-to-understand language.
Lala cleared his chartered accountancy exam in 2018 and completed his articleship with Chaturvedi and Shah.
Ask Vivek Lala your question HERE.
Feature Presentation: Ashish Narsale/Rediff.com
