Tax deduction provisions still make most taxpayers opt for the old tax regime rather than the new one.
According to the income tax (I-T) department data, the total number of Income Tax Returns (ITRs) for AY 2023-24 filed till July 31 was more than 67.7 million, which is 16.1% more than the total ITRs for AY 2022-23 (58.3 million) filed till July 31.
As per the recently released trend report, 85% of taxpayers continued to file ITRs under the old regime and 15% under the new regime. Clear, an online tax filing platform, released this report. The platform has 5 million Indian taxpayers and over a million tax practitioners.
The report further offers intriguing insights into the tax preferences among Indian taxpayers, shedding light on the changing landscape of income tax filing. Some of the key findings were:
1. Gender and age-wise split: Among the total number of taxpayers filing ITR, 70% were male and 30% were female. However, the report highlights distinct tax filing patterns among various age groups. Filers aged between 31 and 40 constitute the largest share at 50%, followed by individuals up to 30 at 28%. Taxpayers between 41 and 50 years make up 16%, while those above 50 years account for 7%. These insights provide valuable guidance for tax planning and strategies for different age brackets.
2. Utilisation of 80C Deductions (Old Regime Exclusive): Within the Old Regime, 80C deductions prove to be significant, with 55% of taxpayers fully utilising this benefit, 17% utilising benefits up to Rs 50,000 and 10% utilising benefits between Rs 1–1.5 lakh. Surprisingly, 10% of individuals have not taken advantage of this provision, indicating the need for increased awareness and education about tax-saving options.
3. Popular tax deductions: Among the available tax deductions, 50% of users claimed 80D for tax deductions on medical insurance, while 20% utilised 80CCD(1B) for tax deductions on NPS self-contributions. These figures emphasise the importance of health and retirement planning among Indian taxpayers and showcase their preferences for tax-saving investments.
“We are thrilled to present these insights and trends derived from our vast user data. It showcases the evolving tax landscape in India where the New Regime is slowly taking the spotlight, along with a heightened focus on tax-saving opportunities,” said Archit Gupta, Founder and CEO of Clear.
Thus, the tax deductions sections under the Income Tax Act still prove significant beneficial provisions for taxpayers opting for the old tax regime.
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