New tax regime likely to have attracted 5.5 crore taxpayers in FY24: Report
Aug 22, 2023
Around 5.5 crore taxpayers may have switched to the new tax regime in the current fiscal year, as the new income tax system has become more appealing for the financial year 2023–24 with a rebate on income up to ₹7 lakh, said Business Standard in its report citing a senior government official.
The majority of these taxpayers, it was stated, have taxable incomes of up to ₹7 lakh.
“We don’t see any reason why 55 million won’t shift to the new tax regime. Most young taxpayers, earning around ₹7.5-8 lakh, or even up to ₹10 lakh prefer income tax filing to be flexible yet straightforward," said Business Standard (BS) in its report quoting the official.
Financial Minister Nirmala Sitharaman brought about income tax relief for individual taxpayers, particularly those on salaries, in the Budget 2023–24. While the previous income tax system remained unaltered, the new income tax regime increased the rebate to ₹7 lakh from ₹5 lakh. That indicates there is no tax to be paid by individuals making up to ₹7 lakh. With margin relief applied, there is no tax due for individuals making up to ₹7.27 lakh crore.
According to the Business Standard report, under the new tax regime, an annual income up to ₹7 lakh is tax-free, however the Finance Act, 2023 grants a ₹25,000 rebate, providing a marginal reduction of up to ₹27,000. For tax reasons, income up to ₹7.27 lakh would be treated as equal to ₹7 lakh, meaning it will be tax-free.
In order to ascertain whether the new tax system was advantageous to them, many taxpayers were also eager to try new things. The official said the taxpayers can go back to the old tax regime in case they find it more beneficial, according to the Business Standard report.
Only in the following assessment year (2024–2025), when the earnings and tax liabilities for the current fiscal year are displayed, will it be evident how many people have chosen the new tax regime, said Business Standard report.
"The income tax department’s FY23 data shows that 4.84 crore taxpayers had a taxable income of up to ₹5 lakh. More than 1.12 crore people had a taxable income between ₹5 lakh and ₹10 lakh, while the number of taxpayers with taxable income between ₹10 lakh and ₹20 lakh stood at 47 lakh, according to the report," mentioned Business Standard.
Twenty lakh taxpayers were in the ₹20 lakh– ₹50 lakh tax bracket, and 3.8 lakh taxpayers had taxable income between ₹50 lakh and ₹1 crore. Similarly, 2.6 lakh taxpayers had taxable income of more than ₹1 crore, as per the BS report.
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