India’s tax landscape is seeing a decisive shift, with a large majority of individual taxpayers now choosing the simplified tax structure introduced in recent years.
Central Board of Direct Taxes Chairman Ravi Agrawal said on Wednesday that about 88% of individual taxpayers have opted for the new tax regime. He also clarified that the government is not considering a sunset clause for filing income tax returns under the old regime.
Agrawal said choosing between the old and new regimes remains a taxpayer’s decision, but the response to the new system has been “very good”. He noted, “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.”
He added that adoption is even higher among presumptive tax cases. “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 during a post-Budget interaction with a news agency.
The CBDT chief expressed confidence that changes announced in the FY27 Budget will further encourage the shift. Referring to the revised minimum alternate tax framework, he said, with the new MAT provisions, “it will also persuade people to move to the new tax regime”. MAT applies only to companies and is levied at 15% of book profits when it exceeds regular tax liability. The Budget has proposed making MAT a final tax and reducing the rate from 15% to 14% for companies under the old regime.
On the proposed increase in securities transaction tax, Agrawal said the move is expected to discourage aggressive trading by retail investors. “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.
The Budget 2026–27 has proposed raising STT on futures to 0.05% from 0.02%. STT on options premium and exercise of options is proposed to increase to 0.15% from 0.1% and 0.125%, respectively.
Agrawal also said he is confident of meeting the revised direct tax collection target of ₹24.21 lakh crore for FY25–26.
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