Shift Towards New Tax Regime in India Evident in ITR Filings for AY 2024-25

Shift Towards New Tax Regime in India Evident in ITR Filings for AY 2024-25

Shift Towards New Tax Regime in India Evident in ITR Filings for AY 2024-25

Date: August 3, 2024

Location: New Delhi, India

The Income Tax Department of India has released data revealing significant insights into the filing patterns of taxpayers for the Assessment Year (AY) 2024-25. A total of 7.28 crore Income Tax Returns (ITRs) have been filed, marking a substantial increase in the adoption of the new tax regime compared to the old one.

Key Highlights:

  1. Overall Filings:

    • For AY 2024-25, a total of 7.28 crore ITRs have been filed, reflecting the growing compliance and awareness among taxpayers.
    • This marks an increase from the previous assessment year, showcasing the efforts of the Income Tax Department to simplify the filing process.

  2. New Tax Regime Dominance:

    • Out of the total filings, 5.27 crore ITRs were submitted under the new tax regime.
    • This represents a significant shift, as only 2.01 crore ITRs were filed under the old tax regime.

  3. Reasons for the Shift:

    • Simplified Tax Structure: The new tax regime offers a simplified tax structure with lower tax rates and reduced exemptions, attracting more taxpayers.
    • Increased Awareness: Government initiatives to promote the new regime, along with widespread awareness campaigns, have contributed to the increased adoption.
    • Flexibility: Taxpayers appreciate the option to choose between the old and new regimes, allowing them to select the most beneficial option.

  4. Government Initiatives:

    • The Indian government has been actively promoting the new tax regime as part of its broader tax reforms aimed at increasing transparency and reducing complexity.
    • Introduction of digital tools and resources has made it easier for taxpayers to file returns accurately and efficiently.

  5. Tax Expert Opinions:

    • Tax experts believe the shift indicates a positive response to the government’s efforts to simplify tax compliance.
    • However, they also caution that some taxpayers might miss out on potential benefits of the old regime, which offers various deductions and exemptions.

  6. Future Outlook:

    • The trend suggests that more taxpayers might continue to opt for the new regime in the coming years, given its straightforward approach.
    • Continuous enhancements in the tax filing infrastructure and ongoing education efforts are expected to further bolster compliance rates.

Conclusion:

The AY 2024-25 filing data underscores a pivotal transition in India’s tax landscape, with a clear inclination towards the new tax regime. This shift aligns with the government’s vision of a more streamlined tax system, ultimately aiming to enhance taxpayer convenience and compliance. As the landscape evolves, both taxpayers and authorities are likely to benefit from the simplified processes and increased transparency.