Perception of Taxpayers Regarding New Income Tax Structure

Abstract

Taxes are a crucial source of funding for government operations and one of the factors that determine a nation's ability to prosper economically. Taxes are monetary or other obligations that must be paid for a government to function. In India, taxes are divided into direct and indirect taxes, and they can be paid in cash or in the labor equivalent. Unlike indirect taxes, which affect disposable income indirectly. Income tax is a significant source of money and a powerful tool for reducing economic inequality. A tax levied on people or organizations that have different levels of income or taxable income is known as an income tax. The tax that the income tax division collects for the central government. India's tax-to-GDP ratio stood at 17–17.5 percent up till 2018–19. In India, the overall amount of taxes paid makes a significant contribution. By the end of January 2020, the government had received Rs. 7.52 lakh crore in direct taxes. Although while the Indian tax system has undergone significant improvements, it is still very far from being ideal. Many issues, including tax evasion, illicit income, and the existence of an analogous economy, show that the Indian tax system needs important reforms in the near future to address all these issues. The new income tax structure will help those who make modest investments. With the new tax system's seven lower-income tax slabs, everyone paying taxes without claiming tax deductions can benefit from paying a reduced rate of tax. The standard deduction benefit is extended to the new tax regime as well as the increase in the refund limit to Rs. 7 lakhs under the new income tax structure. The highest surcharge rate under the New Tax Regime has been decreased from 37% to 25%, making this choice the default tax regime. This study's objective is to investigate how taxpayers perceive the new income tax system based on four factors: tax compliance, tax awareness, tax evasion behavior, and tax complexity. Both the questionnaire approach and the descriptive analysis approach are utilized while gathering primary data. In this study, both secondary and primary data are utilized.