The Central Board of Direct Taxes (CBDT), the apex policymaking body for direct taxes, believes that with the significant tax relief provided in the Budget 2025, nearly all taxpayers are likely to transition to the new tax regime. It is worth noting that in the assessment year 2024–25, the adoption rate of the concessional tax regime was approximately 72%.

When asked whether the budget announcement of zero tax on annual income up to ₹12 lakh would lead to 100% of taxpayers shifting to the new system, CBDT Chairperson Ravi Agrawal said, "Yes, the likelihood is always there. In fact, the reduction in tax rates under the new regime will certainly nudge people toward making the switch."

"This is how we simplify tax laws. Why is the old regime complex for taxpayers? Because it involves multiple deductions and exemptions, leaving room for interpretation. In contrast, the new tax regime, with no deductions or exemptions, makes tax calculations much simpler," Agrawal explained.

"That is the objective—encouraging taxpayers to move toward the new system. I believe that with these changes, most taxpayers will opt for the new tax regime. The old regime remains available as an option, but it will be interesting to see who continues with it. This will help us analyse the reasons behind their choice," he added.

In Budget 2025, Finance Minister Nirmala Sitharaman announced zero tax on annual income up to ₹12 lakh under the concessional tax regime. Additionally, tax slab benefits have been extended across all brackets, with the highest tax rate of 30% now applicable to income above ₹24 lakh, compared to the previous threshold of ₹10 lakh.