Impact of the New Income Tax Regime on Individual Taxpayer Compliance and Revenue Mobilization in India: A Conceptual Assessment of Tax Simplification, Taxpayer Choice, and Direct Tax Administration during 2020–August 2024

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@article{1723519,
      author = {Dr. Shamala K.},
      title = {Impact of the New Income Tax Regime on Individual Taxpayer Compliance and Revenue Mobilization in India: A Conceptual Assessment of Tax Simplification, Taxpayer Choice, and Direct Tax Administration during 2020–August 2024},
      journal = {Iconic Research And Engineering Journals},
      year = {2024},
      volume = {8},
      number = {3},
      pages = {1185-1199},
      issn = {2456-8880},
      url = {https://www.irejournals.com/formatedpaper/1723519.pdf},
      abstract = {Introduction of India's New Income Tax Regime under Section 115BAC from FY 2020-21 represented a fundamental reform in personal income taxation by providing individuals with lower more graduated tax rates in exchange for losing many exemptions and deductions, and reform was initially launched as an optional alternative to the old regime with the clear objective of facilitating income-tax compliance and lowering reliance on tax professionals and easing the computation burden on taxpayers (Press Information Bureau); against this background, the present study conceptually discusses whether and how the evolution of New Income Tax Regime in 2020-31 August 2024 has mediated individual taxpayer compliance and direct-tax revenue mobilization through tax simplification, taxpayer choice, digital administration, and extension of the effective tax base; the study is conceived as a conceptual descriptive investigation with secondary data evidence as available up to September 2024, including Union Budgets, Finance Acts, Income Tax Department and CBDT reports, Economic Survey, government revenue statistics, institutional publications and reports, and relevant literature, which have been analyzed through thematic conceptual analysis rather than econometric causal estimation; the key proposition points to the conceptual pathway 'New Income Tax Regime tax structure lower compliance complexity and calculation time taxpayer choice and participation voluntary compliance broader tax base revenue increased', which is relevant since the Finance Act 2023 made the new regime the default from FY 2023-24, increased the Section 87A rebate threshold up to which taxpayers with total income up to 7 lakh could have zero tax liability, while taxpayers could still opt for the old regime (Income Tax Department); by July 2024, the government estimated that on average two-thirds of individual income-tax taxpayers had switched to the new regime, and Budget 2024-25 reworked the slabs while increasing the standard deduction for salaried taxpayers from 50,000 to 75,000 (Ministry of Finance); and Expenses of Government of India, 2024; from an economic perspective, compliance and revenue implications must depend on income, deductions forgone, knowledge, digital capability, human behaviour, administration, inflation, employment and income, and economic growth; therefore, considering the smaller but significant literature, conclusions should read the new income-tax regime as a component of India's journey toward a simpler, choice-based, digitally administered personal income-taxation system that may improve compliance and tax collection, while monitoring the true rates of compliance, economic efficiency, and tax equity.},
      keywords = {New Income Tax Regime, Tax Simplification, Individual Tax Compliance, Taxpayer Choice, Revenue Mobilization, Digital Tax Administration, Section 115BAC, India},
      month = {September},
      doi = {https://doi.org/10.64388/IREV8I3-1723519}
  }