New Tax Regime Vs Old Tax Regime: The middle class is happy with the announcement of making income of Rs 12 lakh tax free in Budget 2025. CBDT Chairman Ravi Agarwal said that more than 90% of taxpayers can adopt the new tax system.
New Tax Regime Vs Old Tax Regime: The middle class of the country is very happy with the announcement of making income of Rs 12 lakh tax free in the General Budget 2025. Now the question is whether the benefit is in the old tax regime or the new tax regime? This question was answered by Ravi Agarwal, Chairman of the Central Board of Direct Taxes (CBDT). He said that after the budget announcement of not imposing tax on income up to Rs 12 lakh and changes in all tax slabs, more than 90 percent of individual taxpayers can adopt the new tax system. At present this figure is around 75 percent. Ravi Agarwal said in an interview to PTI after the budget that the philosophy and way of working of the government and the Income Tax Department is to ensure non-interference tax administration in the country. This is done by using artificial intelligence (AI) in a better way apart from gathering regular human-based intelligence.
The CBDT chief said that the tax processes available for a common taxpayer to declare their income are not very complex. For this, he gave the example of simplified ITR-1, pre-filled income tax returns, automatic calculation of tax deduction at source (TDS).
NTR is more simple and accessible
He also cited the new tax system (NTR) which has simple calculations for the taxpayer. In such a situation, he can file his ITR without the help of any professional. In this, no deduction or exemption is allowed like the old system. CBDT is the administrative body of the Income Tax Department under the Union Finance Ministry. Finance Minister Nirmala Sitharaman announced significant income tax cuts for the middle class in the budget speech on Saturday. He said that under the new tax system, individuals with income up to Rs 12 lakh annually will not have to pay any tax. This limit of exemption is currently Rs 7 lakh. An additional standard deduction of Rs 75,000 is also available for the salaried class.
According to budget documents, Sitharaman also changed the tax slabs for people earning above this limit. This will help people earning up to Rs 25 lakh annually save up to Rs 1.1 lakh in tax every year. Aggarwal admitted that there is always scope for improvement to move forward and this is true in every sector, including complex business structures.
He said, “I would say that for the common taxpayer, things have been simplified to a great extent.” He said that with the announcements made in the budget regarding income tax payment, more and more taxpayers will be encouraged to opt for the new tax system (NTR) in the coming time. Aggarwal said, “If not 100 percent taxpayers, then from next year we will see figures of 90 percent or maybe even more.” According to the current data, about 74-75 percent of individual taxpayers have adopted NTR, which the government brought a few years ago.
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