In a significant shift in taxpayer preferences, approximately 66% of taxpayers have chosen the new income tax regime for filing their returns this season, according to Central Board of Direct Taxes (CBDT) Chairman Ravi Agrawal. This announcement was made on Wednesday, highlighting a marked increase in the adoption of the new tax regime compared to previous years.
Chairman Agrawal noted a remarkable uptick in the pace of income tax return (ITR) filings this year. "Last year, the milestone of 4 crore ITR filings was achieved on July 25. However, this year, we crossed the same number on the night of July 22," he said. This early surge indicates not only a higher compliance rate but also a growing preference for the simplified tax regime introduced by the government.
The new tax regime, introduced as an alternative to the existing structure, offers lower tax rates with fewer exemptions and deductions. This simplified approach has evidently resonated with a large section of taxpayers who prefer a straightforward calculation over the more complex traditional regime.
Tax experts believe this trend may be driven by the desire for simplicity and ease of filing, especially among younger taxpayers and those with fewer investments and deductions to claim. The new regime's appeal lies in its straightforward structure, making it an attractive option for those seeking to minimize the hassle associated with tax compliance.
The CBDT has been proactive in encouraging taxpayers to file their returns early, emphasizing the benefits of timely compliance. With the deadline for filing income tax returns approaching, the department has been leveraging digital platforms and outreach programs to facilitate the process for taxpayers.
The transition to the new regime aligns with the government's broader objective of simplifying tax laws and enhancing the ease of doing business. As more taxpayers embrace this simplified system, it could potentially lead to greater efficiency in tax administration and higher overall compliance rates.
As the filing season progresses, it will be interesting to observe whether the momentum continues and how the final numbers compare to previous years. The CBDT remains optimistic about achieving higher compliance and further simplifying the tax filing process for the citizens.
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