5.5 crore may have shifted to new tax regime, say I-T officials

The number of filed by the July 31 deadline touched a new high of 6.77 crore this year.

Around 5.5 crore taxpayers may have migrated to the new tax regime, which was overhauled in the budget, for the ongoing financial year, the revenue department’s initial estimates indicate. Most of these taxpayers have a taxable income of up to Rs 7 lakh, a senior government official told the Business Standard.

The number is significant because the government in the budget for financial year 2024 presented in February overhauled the new tax regime to make it more appealing. A substantial portion of taxpayers had stayed away from the new tax regime after its launch in the fiscal year 2020-21.

Moneycontrol couldn't verify the report independently.

“We don’t see a reason why 55 million won’t shift to the new tax regime. Most young taxpayers, earning around Rs 7.5-8 lakh, or even up to Rs 10 lakh prefer income tax filing to be flexible yet straightforward,” the financial daily quoted the official as saying.

Also Read: Average income of middle-class Indians triples from Rs 4.4 lakh in FY13 to Rs 13 lakh in FY22

The official added that many taxpayers were open to experimentation to determine if the new tax regime was beneficial to them. Taxpayers have the option to go back to the old tax regime in the next financial year if they find it more favourable.

The exact number of individuals opting for the new tax regime would only become clear in the next assessment year (2024-25), which would show the earnings and tax obligations for the current financial year.

The income-tax department’s FY 2023 data shows that 4.84 crore taxpayers had a taxable income of up to Rs 5 lakh. More than 1.12 crore people had a taxable income of between Rs 5 lakh and Rs 10 lakh, while the number of taxpayers with taxable income between Rs 10 lakh and Rs 20 lakh stood at 47 lakh.

The number of taxpayers in the range of Rs 20 lakh-Rs 50 lakh stood at 20 lakh, while there were 3.8 lakh taxpayers with taxable income between Rs 50 lakh and Rs 1 crore.

Similarly, 2.6 lakh taxpayers had taxable income of more than Rs 1 crore, the report said.

Also Read: Tax filing: What happens if you miss the July 31 return-filing deadline?

“The total number of ITRs (income-tax returns) for the assessment year 2023-24 filed till 31st July 2023 are more than 6.77 crore, which is 16.1 percent more than the total ITRs for AY 2022-23 (5.83 crore) filed till 31st July 2022,” the tax department had said in a statement.