**

The new tax regime introduced for ITR filing in 2025 is proving to be a bitter pill to swallow for many small depositors and salaried individuals in India. While touted as a simplified system offering lower tax rates, a closer look reveals that the benefits largely bypass those with modest incomes and savings, sparking widespread criticism and calls for a significant rethink. Experts are raising concerns about the unintended consequences, urging the government to re-evaluate its approach before the next ITR filing season.

ITR Filing 2025: The New Tax Regime's Unforeseen Impact

The 2025 ITR filing deadline looms, and with it, the realization that the new tax regime isn't as beneficial as initially advertised for a significant portion of the population. The simplified structure, while attractive on paper, fails to adequately account for the financial realities of many middle-class Indians. This is particularly true for those who rely heavily on fixed deposits, savings accounts, and other forms of interest income, which are now taxed more heavily under the new regime.

The old tax regime, with its intricate deductions and exemptions, allowed taxpayers to significantly reduce their taxable income, often making it a more favorable option for those with various investments and income streams. The new regime, however, offers lower tax slabs but eliminates many of these deductions, resulting in higher tax outlays for individuals who previously benefited from them.

Who is Affected Most by the New Tax Regime?

The new ITR filing rules disproportionately affect:

• Small Depositors: Individuals relying on interest income from fixed deposits (FDs) and savings accounts bear the brunt of the change. The absence of deductions for interest earned significantly increases their taxable income.
• Salaried Individuals with Limited Investment Options: Those with limited investment avenues and primarily relying on salaries find the new regime less advantageous compared to the old regime's deductions for investments like PPF, ELSS, and home loan interest.
• Senior Citizens: Senior citizens, who often rely on interest income from their savings for their daily expenses, are particularly hard-hit by the removal of several tax benefits. Their fixed income is now subject to higher taxation.

Understanding the Tax Slabs and Deductions: Old vs. New

To fully grasp the impact, let's compare the tax slabs and deductions under both the old and new tax regimes:

Old Tax Regime: Offered a range of deductions and exemptions under Section 80C (investments up to ₹1.5 lakh), Section 80D (medical insurance), Section 24 (home loan interest), and many others. These deductions significantly lowered the taxable income.

New Tax Regime: Offers lower tax slabs but with minimal or no deductions. This means that the entire income is subject to the tax slab applicable, leading to higher tax liabilities for those who previously utilized the deductions effectively.

Expert Opinions and Calls for a Regime Overhaul

Financial experts are echoing the concerns of ordinary taxpayers. They argue that the new tax regime lacks the necessary consideration for the financial circumstances of a large segment of the population.

"The government's intention to simplify the tax system is commendable," says Mr. Rohan Sharma, a leading tax consultant. "However, the current implementation unfairly penalizes small depositors and salaried individuals. A more balanced approach is needed, incorporating options that cater to different income groups and financial situations."

Another expert, Ms. Priya Kapoor, a tax lawyer, adds: "The lack of adequate transitional support for those accustomed to the old system is concerning. Many individuals may not be fully aware of the implications of switching to the new regime, leading to unforeseen tax burdens."

Demand for a More Inclusive Tax Structure

The experts' consensus is clear: the new tax regime needs a serious overhaul. The current structure fails to consider the needs of those with lower incomes and limited investment choices. Suggestions for improvement include:

• Reintroducing Key Deductions: Reintroducing or modifying crucial deductions, particularly those benefiting small depositors and senior citizens, is crucial.
• Providing a Grace Period: Allowing a grace period for taxpayers to adjust to the new system would help alleviate the immediate impact.
• Targeted Support Measures: Implementing support measures targeted at lower-income groups would help mitigate the financial strain.
• Increased Transparency and Awareness: Improving the transparency and public awareness surrounding the new tax regime is essential to empower taxpayers to make informed decisions.

What Should Taxpayers Do Now?

With the 2025 ITR filing deadline approaching, taxpayers need to carefully evaluate their situation. Analyzing both the old and new tax regimes, considering income sources, investment patterns, and age, is crucial before making a decision. Seeking professional tax advice is highly recommended to determine the most advantageous option for individual circumstances.

The government must address the concerns raised by experts and taxpayers before the next ITR filing season. Failing to do so risks further alienating a significant portion of the population and undermining the intended benefits of a simplified tax system. The current situation highlights the need for a more inclusive and equitable tax structure that serves the interests of all income groups. The future of ITR filing in India depends on a thoughtful reconsideration of the current tax regime.