According to Revenue Secretary Sanjay Malhotra, there were about six crore income tax returns filed in 2023–2024, of which 70% were filed under the new simplified tax regime, which gives a lower tax rate but fewer deductions.
Speaking at the PHD Chamber of Commerce and Industry’s post-budget session, Malhotra noted that at first, certain concerns were expressed in certain quarters over whether or not individuals would switch to the simpler tax system.
He did, however, note that the high proportion of taxpayers who preferred the new regime indicates a favorable reaction and the smooth transition to the streamlined system.
In comparison to the prior tax regime, the new tax regime offers lower tax rates but allows fewer exemptions and deductions. It was implemented to streamline the tax procedure. Malhotra emphasized that the goal of this regime’s transition is to lessen the cost of compliance and simplify the tax system for ordinary people.
Additionally, he stated that the goal of the comprehensive income tax study included in the 2024–2025 budget is to simplify the tax code.
“We will come up with a draft and then we will seek suggestions from stakeholders,” Malhotra said.
There are now two personal income tax systems in the nation. The tax rates were greater under the previous income tax system, but the process of claiming exemptions and deductions was comparatively more difficult for individuals. The ability to take advantage of a lower tax rate without having to file for deductions makes the new tax regime simpler.
Up to 58% of business tax revenue has come from the FY23 streamlined tax structure.
In the Union Budget, Finance Minister Nirmala Sitharaman also declared that a thorough examination of the Income-tax Act, 1961 will be started and finished in six months.
“The Act is intended to be clear, succinct, and simple to read and comprehend,” she stated. The Finance Minister added that the government will rationalize and simplify the compounding of such offenses and release a standard operating procedure (SoP) for TDS defaults.
Additionally, there will be a combination of the two charity trust tax exemption programs into one.
