New Delhi, July 31 (IANS): Around six crore income tax returns have been filed in 2023-24, of which 70 per cent were filed under the new simplified tax regime which offers a lower rate of tax but fewer deductions, Revenue Secretary Sanjay Malhotra has said.
Addressing the post-budget session of PHD Chamber of Commerce and Industry, Malhotra said initially some apprehensions were raised in some sections as to whether people would shift to the simplified tax regime.
However, the large percentage of taxpayers preferring to adopt the new regime reflects a positive response and the successful transition to the simplified system, he pointed out.
The new tax regime, introduced to simplify the tax process, offers lower tax rates compared to the previous regime but provides fewer exemptions and deductions. Malhotra highlighted that the move towards this regime aims to reduce compliance burdens and make the tax system simpler for individuals to deal with.
He also said that the comprehensive income tax review announced in the Budget for 2024-25 is aimed at making the tax law simpler.
"We will come up with a draft and then we will seek suggestions from stakeholders," Malhotra added.
Currently, the country has two personal income tax regimes. In the old income tax regime, the tax rates are higher but taxpayers can claim exemptions and deductions which is a relatively more complicated process. The new tax regime is simpler as it allows the taxpayer to avail of a lower tax rate without the process of filing for deductions.
As much as 58 per cent of corporate tax has come from the simplified tax regime in FY23.
Finance Minister Nirmala Sitharaman has also announced in the Union Budget that a comprehensive review of the Income-tax Act, 1961 would be undertaken which would be completed in six months.
“The purpose is to make the Act concise, lucid, easy to read and understand,” she said, The Finance Minister also said that the government will come out with SoP (standard operating procedure) for TDS defaults and simplify and rationalise compounding of such offences.
Besides, the two tax exemption regimes for charitable trusts will be merged into one.