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Nearly 58.6 lakh returns were filed by first-time filers, a fair indication of widening of tax base, the Income Tax department has said. File
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Most of India’s personal income taxpayers have moved to the simpler new tax regime in this assessment year, with 72% of those who had filed their returns by the July 31 deadline opting for it, even as the number of Income Tax (I-T) return filings rose 7.5% to hit a record high of almost 7.29 crore.

“Out of the total ITRs [I-T returns] of 7.28 crore filed for Assessment Year 2024-25, 5.27 crore have been filed in the new tax regime compared to 2.01 crore ITRs filed in the old tax regime,” the Central Board of Direct Taxes (CBDT) said on Friday, terming the increase in number of taxpayers under the new tax regime ‘heartening’.

The switchover has likely been expedited by significant changes in the new tax regime, originally introduced in 2020, effected in the Budget 2023-24 to make it attractive. Apart from making the new system ‘the default tax regime’ for taxpayers, Finance Minister Nirmala Sitharaman had slashed the tax rate slabs to five from six and raised the tax-free income limit to ₹3 lakh from ₹2.5 lakh.

Last year’s Budget had also granted a hike in the tax rebate limit from ₹5 lakh to ₹7 lakh a year under the new tax regime, compared with ₹5 lakh a year applicable for the old tax regime. With Budget 2024-25 raising the standard deduction to ₹75,000 from ₹50,000 and rejigging the tax slabs under the new regime again, there could be a greater impetus for taxpayers to opt out of the old regime.

Nearly 58.6 lakh I-T returns were filed by first-time filers, a fair indication of widening of tax base, the department said in a statement. A little over 6.77 crore returns had been filed by the July 31 deadline last year, while total ITR filings were 8.61 crore.

Taking the first-time filers into account, back-of-the-envelope calculations show that about 7.19 lakh taxpayers who had filed their returns on time last year, have not met the deadline this year.

Portal ramped up

Responding to tax practitioners’ concerns about slow processing and down times on the I-T e-filing portal ahead of the deadline, CBDT chairperson Ravi Agarwal had told The Hindu that those issues had been resolved by ramping up the portal’s handling capacity. The filings data for the last few days suggests this clicked.

From about 28 lakh filings on the portal on July 24, the number of ITRs filed soared to almost 70 lakh on July 31. “The filing of ITRs peaked on July 31 [due date for salaried taxpayers and other non-tax audit cases] with over 69.92 lakh ITRs being filed on a single day and a highest per hour rate of 5.07 lakh recorded between 7 p.m. to 8 p.m. on July 31,” the I-T department said.

The highest per second rate of ITR filings was 917, achieved on July 17 early morning, while the highest per minute rate of ITR filings was 9,367, at 8.08 p.m. on the deadline day.

“During the peak filing period, the e-filing portal successfully handled huge traffic, providing a seamless experience to taxpayers for filing of ITRs. On July 31, 2024 alone, successful logins stood at 3.2 crore,” the statement said.

Over 43.82% of ITRs were filed using the online utility available on the e-filing portal and the balance have been filed using offline ITR utilities.

The government allocates 21% of its budget to the State’s portion of taxes and duties
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Finance Minister Nirmala Sitaraman presented the Narendra Modi government’s first full-fledged budget after the NDA secured third consecutive win.

Budget 2024 LIVE Updates

The Budget mentioned net tax receipts for 2024-25 at ₹25.83 lakh crore, while the expenditure is estimated at 48.21 lakh crore.

The majority of money comes from borrowing and other liabilities (27%), followed by income tax (19%) and GST & other taxes (18%), with other sources including non-debt taxes and corporation tax.

Ms. Sitaraman stated that taxpayers appreciate the simplified New Tax Regime without exemptions or deductions for corporate tax and personal income tax. “58% of corporate tax came from the simplified tax regime in the financial year 2022-23. Similarly, as per data available till now for the last fiscal, more than two-thirds have availed of the new personal income tax regime,” she added. 

The government allocates 21% of its budget to the State’s portion of taxes and duties, followed by interest payments at 19%.

While 16% of its Budget is utilised for Central sector schemes, excluding capital outlays on defence and subsidies, only 4% of the fund has been used for pensions. To address the issues regarding the New Pension Scheme (NPS), the FM said, “a solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens”. 

The Finance Ministry said there is no change in the new income tax regime for individuals for the current fiscal year and individual taxpayers can opt out of the regime at the time of filing their income tax return (ITR).

Clarifying on social media posts claiming certain changes in the new tax regime effective April 1, the Ministry said, “There is no new change which is coming in from 01.04.2024.”

A modified new income tax regime was rolled out from the financial year beginning April 1, 2023, for individuals under which the tax rates are “significantly lower”. However, the benefit of various exemptions and deductions (other than the standard deduction of ₹50,000 from salary and ₹15,000 from family pension) is not available, as in the old regime.

“New tax regime is the default tax regime. However, taxpayers can choose the tax regime (old or new) that they think is beneficial to them…Option for opting out from the new tax regime is available till filing of return for the AY 2024-25,” the Ministry said.

Under the new I-T regime, income of up to ₹3 lakh is exempt from tax. A 5% tax is levied on income between ₹3-6 lakh, 10% for income between ₹6-9 lakh. Income between ₹9-12 lakh and ₹12-15 lakh is subject to 15% and 20% tax, respectively. A 30% tax would be applicable on income above ₹15 lakh.

The new tax regime was set as “a default regime” from 2023-24 and the Assessment Year corresponding to this is AY 2024-25. This can be changed by the taxpayer at the time of filing the ITR. Eligible persons without any business income will have the option to choose the regime for each financial year. So, they can choose the new tax regime in one financial year and the old tax regime in another year and vice-versa, the Ministry said in a statement.

The old tax regime which is still in force and offers a host of deductions and exemptions, exempts income up to Rs 2.5 lakh from taxes. Income from ₹2.5-5 lakh attracts 5% tax, and 20% for income between ₹5 lakh and ₹10 lakh. A 30% is levied on income above ₹10 lakh.