In the realm of Income Tax, the past 2-3 years have witnessed significant changes aimed at simplifying the filing process for taxpayers.
Technological advancements, the introduction of faceless assessments, and a reduced tax liability are among the noteworthy developments.
Here are five pivotal changes that have made income tax return filing more accessible and efficient.
1. New Tax Regime: Attractive Rates and Rebates
The introduction of the new income tax regime in 2020 brought about lower tax rates, albeit without the benefits of deductions and exemptions.
The Budget 2023 added further allure to the new regime by announcing a rebate on annual income up to Rs 7 lakh, making the tax liability zero.
Additionally, an annual standard deduction of Rs 50,000 was introduced, enhancing the attractiveness of the new tax regime.
2. Tax Rebate in Old Regime: Enhanced Tax-Free Limit
In the old income tax regime, individuals with an annual income up to Rs 5 lakh are exempt from paying taxes. Further leveraging various deductions and exemptions can increase this ‘tax-free limit.’
For instance, a person with an annual income of Rs 7 lakh can claim deductions under Section 80C and benefit from the standard deduction of Rs 50,000, resulting in a zero tax liability.
3. Faceless Assessment and Appeal: Streamlining Processes
The shift to faceless assessment and appeal procedures has streamlined the income tax process.
Taxpayers now have the convenience of responding to Income Tax Department notices electronically through their registered e-filing accounts, enhancing efficiency and reducing manual intervention.
4. Pre-filled ITR Form, AIS, Form 26AS: Comprehensive Income Reporting
The introduction of the Annual Information Statement (AIS) and Form 26AS has virtually eliminated the possibility of omitting any income while filing returns.
These documents provide a comprehensive record of taxpayers’ financial transactions, contributing to accurate income reporting and reducing the likelihood of receiving notices.
5. Quick Processing of ITR and Refund: Expedited Turnaround
In recent years, the processing time for income tax returns and refunds has significantly decreased.
A report by CII indicates that over 53 percent of surveyed taxpayers experienced a refund arriving in their bank accounts in less than a month.
This accelerated turnaround time reflects efficiency gains in the income tax filing and refund processes, positively impacting taxpayers.
