New Delhi, Oct 10, 2023 : The Central Board of Direct Taxes (CBDT) chairman, Nitin Gupta, announced that approximately 70% of personal income taxpayers are anticipated to transition to the new tax regime introduced in the FY24 union budget. Gupta also highlighted that about 60% of corporate income taxpayers have already shifted to the low tax rate regime. This announcement comes amid rising collections and advancements in India’s tax collection mechanisms.
Direct tax collections, after refunds, have reached ₹9.57 trillion in the current financial year, as of October 9, 2023. This represents a substantial increase of 21.8% compared to the net collections at the same point in the previous fiscal year. Prior to refunds, the tax authority amassed ₹11.07 trillion, nearly 18% more than the collections during the corresponding period in the previous year.
Several factors have contributed to this impressive growth in tax collections. The utilization of technology and the sharing of taxpayers’ transaction data by various entities through annual information statements have been pivotal. Additionally, as of July this year, approximately 5.3 million new taxpayers have filed their tax returns.
Gupta also mentioned that India has collected ₹600 crore this year as tax deducted at source (TDS) from net winnings issued by online gaming platforms to players. The union budget expanded the scope of TDS on net winnings from online games. TDS has become increasingly important as the tax authority broadens its oversight of economic activities.
Gupta emphasized that a significant portion of individual taxpayers, estimated to be between 60-70%, is likely to transition to the new personal income tax regime. This regime offers beneficial provisions, and taxpayers have the flexibility to choose between the old and new regimes when filing their returns, even if their employer deducts tax according to the new regime.
For corporations, the new tax regime introduced in 2019, featuring lower tax rates without tax exemptions, has been widely adopted. Gupta revealed that approximately 60% of corporate profits shifted to the new tax regime in FY23, leading to positive impacts on corporate tax collection.
India is also collaborating with G20 nations to establish automatic data exchange regarding undisclosed overseas real estate assets held by residents. Current arrangements focus primarily on sharing financial data, and investigations into cases of undisclosed overseas assets, such as those revealed in leaks like the Panama Papers and Paradise Papers, are progressing.
As of October 9, central government’s net direct tax collections have reached ₹9.57 trillion, demonstrating a substantial 21.8% improvement over the corresponding period in the previous fiscal year. Corporate and personal income tax receipts account for a significant portion of the total budget estimates of ₹18.2 trillion for the current fiscal year.
In the current assessment year, ending in March, 72.7 million income tax returns have already been filed and verified, with over 95% of the verified returns processed.
The CBDT has reported that gross corporate tax receipts have grown by 7.3% so far this fiscal year, while personal income tax collections have surged by 29.5%, excluding securities transaction tax (STT) receipts. After accounting for refunds, corporate tax collections have increased by 12.39%, and personal income tax receipts have grown by 32.5%, excluding STT. The department has issued ₹1.50 trillion in tax refunds thus far this year.
