In a significant milestone, more than 8 crore income tax returns (ITRs) have been filed for the assessment year (AY) 2024-25, reflecting a robust filing season. Of these, 74% of taxpayers have chosen the new income tax regime, a shift largely attributed to its simplified structure.
Majority Opt for New Tax Regime
According to sources, over 5.92 crore of the 8 crore ITRs have been filed under the new tax regime, which became the default option for taxpayers starting from the 2023-24 financial year. This tax regime, while offering lower tax rates, does not allow most exemptions and deductions, except for a standard deduction on salary income and family pension.
The new regime has been designed to make tax filing more straightforward, appealing to a significant portion of taxpayers looking for simplicity in tax computation. However, those with specific exemptions or deductions may still prefer the old tax regime.
A Surge in Updated ITRs and Additional Tax Revenue
In addition to the 8 crore filings, around 75 lakh updated ITRs have been filed, bringing in an additional Rs 8,000 crore in taxes. This reflects a growing trend of taxpayers correcting or updating their returns to ensure accurate tax payments, further boosting the revenue collection for the government.
Understanding the Tax Regimes
The new tax regime, effective from FY 2023-24, offers a simplified structure with reduced tax rates but eliminates most exemptions and deductions. On the other hand, the old tax regime continues to offer various exemptions and deductions, such as those for home loan interest, insurance premiums, and others, but with higher tax rates.
Taxpayers have the flexibility to choose between the two regimes each financial year. However, with the new regime now set as the default, it has become the preferred option for many, especially those without significant business income or complex deductions.
Impact on Taxpayers and Revenue
The shift to the new tax regime is expected to streamline tax processes for most individuals, while the updated returns and increased tax revenue signal a more compliant and proactive taxpayer base. With 8 crore ITRs filed for AY 2024-25, this marks a significant step toward better tax compliance and digital record-keeping in India.
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