Page 29 - Banking Finance March 2025

ARTICLE

Implementation of

New Tax Regime

and Its Impact on

Dr. Jaydeb Bera
Direct Tax Revenue Associate Professor and Head

Department of Commerce
Pingla Thana Mahavidyalaya,
West Bengal

Salaried assessees constitute a significant number in the direct tax population in India. Removal
of existing deductions and exemptions causes disappointment especially for the salaried
employees and assessees belong to middle income group who took different tax savings scheme.

Introduction: introduced concessional tax rates with reduced deductions
and exemptions. Section 115BAC was amended in the
A tax is a compulsory transfer of funds from the private
Budget 2023, and the new regime was made the default
sector to the government. Among different sources of
regime from the financial year 2023-24.
finance available to the public economy, taxation is a unique
source from more than one point of view. Different
stakeholders like tax administrators, tax payers have raised Table:1 Present tax slab under new tax
concerns about the reduction of tax rate in the tax structure regime for financial year 2025-26
of the Income Tax Act 1961. Direct tax reforms are necessary
Present tax slab under new tax regime Tax rate
to increase the number of tax payers, to minimize the
burden of tax-payers and to generate more revenue. The Upto Rs. 4,00,000 Nil
introduction of the new tax regime signals a tremendous Rs. 4,00,001 - Rs. 8,00,000 5%
shift in the tax structure of India. The thrust of the new tax Rs. 8,00,001 - Rs. 12,00,000 10%
regime is to improve efficiency and equity of the tax system
Rs. 12,00,001 - Rs. 16,00,000 15%
by eliminating almost all deductions and exemptions. The
Rs. 16,00,001 - Rs. 20,00,000 20%
objective of this study is to show the degree of impact on
direct tax revenue due to implementation of new tax Rs. 20,00,001 - Rs. 24,00,000 25%
regime. Rs. 24,00,001 and above 30%

Source: Budget speech on 1st February, 2025 by Finance
Implementation of new tax regime: Minister, Govt. of India
The new tax regime system i.e. Section 115BAC was
introduced from the financial year 2020-21. This regime Tax structure has been simplified by cutting tax slabs. In the

26 | 2025 | MARCH | BANKING FINANCE