New Delhi, Jan 26
A pre-budget survey reveals that individual taxpayers want relief on the personal tax front to increase their disposable income in Budget 2025-26 to be presented in Parliament by Finance Minister Nirmala Sitharaman on February 1.
A majority of respondents, 57 per cent, want lower tax rates, while 25 per cent advocate for higher exemption limits, according to the survey carried out by consulting and services firm Grant Thornton Bharat.
Based on the latest data available, a significant number of taxpayers have switched to the simplified new personal (default) tax regime. In fact, currently, 72 per cent of taxpayers have opted for this, and only 28 per cent remain in the old tax regime.
However, to further enhance the appeal of the new tax regime, about 46 per cent of respondents advocate for lowering tax rates, while 26 per cent believe exemption limits can be increased, the survey states.
Despite the government's indication that the old tax regime may eventually be phased out, it appears that 63 per cent of the taxpayers still seek an increase in incentives under the old tax regime, the survey points out.
As digitalisation reshapes financial processes, taxpayers are increasingly seeking a more efficient tax filing and compliance system. Grant Thornton Bharat's pre-budget survey indicates that 38 per cent of respondents want the option to make tax payments through foreign banks, which would ease compliance for NRIs. There is also a need to better operationalise tax refunds to overseas banks and for the use of e-verification with OTPs being sent to foreign mobile numbers, for taxpayers living abroad.
In terms of domestic tax compliance, 56 per cent of respondents seek an increase in the income threshold for tax filing to reduce the tax return filing burden on small taxpayers. About 32 per cent of the respondents desire a reduction in the additional tax applicable in case of updated tax returns, and 12 per cent would like an extension in the timeline provided for filing the revised Income Tax Returns (ITRs). These findings suggest that taxpayers are seeking changes that would make tax compliance less burdensome, especially for those living abroad, the survey observes.
What changes should the government make in Union Budget 2025-26 to maximise tax return filing compliance?
As many as 53 per cent of taxpayers are calling for more flexible withdrawal rules and higher tax exemptions under the National Pension Scheme (NPS) on premature withdrawals or annuity payouts. These changes would make the NPS more attractive, driving greater participation and securing long-term financial well-being for individuals.
The survey also indicates that taxpayers seek re-introduction of tax incentives to support the adoption of electrical vehicles (EVs). The introduction of these measures would encourage more widespread use of EVs,
The government had earlier provided tax deductions for interest payable on loans taken to acquire an electric vehicle (EV). This exemption is available only for loans sanctioned during the period April 1, 2019 to March 31, 2023.
- IANS