CBDT Chairman Confirms No Sunset Date for Old Tax Regime, 95% of Refunds Disbursed
In a recent interview, Ravi Agrawal, Chairman of the Central Board of Direct Taxes (CBDT), clarified that the Income-Tax department has no plans to set a "sunset" date for the old tax regime. This announcement comes despite data showing that 88% of individual taxpayers have transitioned to the new tax system in Assessment Year 2025-26. Agrawal emphasized that the choice between regimes remains with taxpayers, and the department is not imposing any phase-out timeline.
Refund Disbursement and NUDGE Campaign Success
Addressing concerns about refund delays, Agrawal stated that these are not intended to push taxpayers toward the new regime. He reported that 95% of refunds have already been disbursed, with expectations to clear most of the remaining cases in February. The department's NUDGE campaign, conducted in November-December of 2024 and 2025, successfully reduced erroneous refund claims by Rs 1,750 crore through revised returns, contributing to an additional Rs 8,800 crore in tax collections over two years.
Budget Proposals and Fundamental Tax Reforms
Agrawal discussed the 2026-27 Union Budget proposals, highlighting fundamental changes aimed at long-term impact. Key areas include decriminalization, minimization of litigation, and clarifications on issues like buybacks, Minimum Alternate Tax (MAT), and data centers. He noted that these reforms provide certainty for taxpayers and streamline tax administration, such as expanding updated returns and rationalizing filing due dates to reduce congestion.
TCS Reduction and STT Hike Analysis
The Chairman explained the rationale behind reducing Tax Collection at Source (TCS) on overseas travel from 20% to 2%, citing improved data analytics and the need to avoid liquidity blockages. On the Securities and Transaction Tax (STT) hike for futures and options (F&O), Agrawal clarified that revenue generation was not the primary goal. He stated that the tax department's move is an attempt to address market concerns, but it is ultimately up to the regulator, SEBI, to decide on further actions, adding that he has no advice for the regulator.
Tax Base Widening and Penalty Rationalization
Agrawal addressed challenges in widening the tax base amid recent tax slab changes and GST cuts. He argued that raising tax slabs does not dent base expansion, as individuals still need to file returns, subjecting them to jurisdiction. The NUDGE campaign helped bring 60% of non-filers into the tax net, with ongoing efforts to track non-compliant taxpayers through tools like TDS. He also mentioned that penalty rationalization is part of a broader effort to provide clarity and certainty, with changes planned to be implemented in a phased manner to avoid frequent disruptions.
Future Outlook and System Updates
Looking ahead, Agrawal expressed confidence that the new tax regime's adoption will increase with revised slab rates in Assessment Year 2026-27. He confirmed that new rules and backend systems will be rolled out in February, with a phased approach to ensure smooth transitions for taxpayers and the department. On demands for tax treatment parity between bank deposits and equity mutual funds, he noted that these issues require ongoing research and stakeholder discussions, with decisions to be made at appropriate times based on overall impact assessments.
