Old vs New Tax Regime: A Policy Conundrum

financialexpress.com:

The New Tax Regime under Section 115BAC of the Income Tax Act 1961 was introduced with the objective of enhancing the number of electronic tax filings and bringing transparency in the Income Tax Returns. The statistics shared by the department recently show a huge growth in e-filings, but the irony is that a limited number of individuals have opted for the New Tax Regime. A total of 7.33 crore personal tax ITRs have been reported by the Department for the Assessment Year 2023-24 as against 6.86 crore in A.Y. 2022-23, marking a growth of 6.79%.

A report by ClearTax, a popular e-filing service provider, has also highlighted the growth in the number of taxpayers for Assessment Year 2023-24 but most of them have opted for the Old Tax Regime. Of their 5 million individual tax payers customer base, 15% opted for the New Tax Regime and the remaining 85% opted for the Old Tax Regime. While the New Tax Regime was portrayed as beneficial for individual taxpayers because of reduced slab rates, it has not gained full acceptance among the individual assessees.

The New Tax Regime was introduced in the Financial Year 2020-21 with more number of progressive tax slabs and subsequently prinked in following Assessment years by introducing additional attractions like section 87A rebate on the total income of Rs 7 lakh and below. The compliance and e-filing has also been simplified by making the new website of Income Tax Department more user-friendly, providing all the relevant details including useful provisions and aid to filing ITR. In addition to it, Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) along with earlier form 26AS, are excellent tools to keep a track of one’s financial transactions during the