A substantial 72% of taxpayers who filed income tax returns for the assessment year 2024-25 (April-March) have opted for the new tax regime, according to the finance ministry. In contrast, only 28% chose to remain with the old tax regime.
As of July 31, the deadline for filing income tax returns for the assessment year 2024-25 without incurring a late fee, over 72.8 million income tax returns were submitted, marking a 7.5% increase from the previous year.
The new simplified tax regime, introduced in the Budget for 2020-21, offers lower tax rates but provides limited deductions. While the old regime offers higher tax rates, it allows taxpayers to claim deductions under various sections of the Income Tax Act. The government has been actively promoting the new regime through various incentives, including tax savings of up to 17,500 rupees as outlined in the Budget for 2024-25.
Finance Minister Nirmala Sitharaman stated on July 23 that approximately two-thirds of taxpayers have transitioned to the new tax regime. However, the government has not yet established a sunset date for the old regime.
Tax collection
In terms of fiscal performance, data up to July 11 shows that the government’s direct tax collection, net of refunds, reached 5.74 lakh core, representing a 19.5% increase from the same period last year. Net corporate tax collections were reported at Rs 2.10 lakh crore, while personal income tax collections stood at Rs 3.46 lakh crore. The government aims to collect Rs 10.20 lakh crore from corporate tax and Rs 11.87 lakh crore from personal income tax in the current financial year.
