88% individual taxpayers shift to new tax regime, CBDT chief rules out sunset clause for old regime
The new income tax regime has seen widespread adoption among individual taxpayers, with about 88 per cent now filing returns under the system, CBDT Chairman Ravi Agrawal said, while clarifying that the government is not considering a sunset clause for the old tax regime.He said the choice between tax regimes continues to remain with taxpayers, but added that the shift towards the new regime has been “very good”.
“I can tell you that when ITR 1, 2, 3 and 4 are taken together (income tax return forms used by individuals), about 88 per cent of people have moved to the new tax regime”. CBDT chairman told told PTI in a post-Budget interaction.“And insofar as presumptive tax cases, about 97 per cent of the taxpayers have moved to the new tax regime. For corporates, about 60 per cent of the income is now being reflected in the new tax regime,” Agrawal said. The CBDT chief said policy changes announced in the FY27 Budget, particularly related to Minimum Alternate Tax (MAT), could further accelerate migration to the new system.
MAT, which applies to companies, is calculated at 15 per cent of book profits when it exceeds normal tax liability. The Budget has proposed treating MAT as final tax and reducing the rate to 14 per cent from 15 per cent for companies continuing under the old regime.On the proposed increase in Securities Transaction Tax (STT), Agrawal said the measure is expected to moderate aggressive derivatives trading activity among retail participants.“Only time would tell how much it would curb, but this is an attempt from the department and the government to actually at least address this issue and flag this issue,” he said.Under Budget 2026-27 proposals, STT on futures contracts will be increased to 0.05 per cent from 0.02 per cent. STT on options premium and options exercise is proposed to be raised to 0.15 per cent from 0.1 per cent and 0.125 per cent, respectively.Agrawal said he remains confident that the revised direct tax collection target of Rs 24.21 lakh crore for FY26 will be achieved.
The old tax regime refers to the pre-2020 income tax structure, which allows multiple deductions and exemptions but carries higher tax rates. The new regime offers lower tax rates with fewer exemptions and allows full exemption for individuals earning up to Rs 15 lakh annually
