- The option of the new and old tax regimes and complex taxation laws require the assistance of experts during tax filing.
- Budget 2023 has announced that the new tax regime will be the default tax regime from FY24.
The central government has been working on simplifying the tax system. However, with the existence of two tax regimes, and a rise in the number of freelancers is making filing taxes tougher —- increasing the need to consult chartered accountants and tax experts.
As per a report by search directory Justdial, there has been a 47% growth in demand for chartered accountants and income tax consultants during the first quarter of FY23 compared to the same period in FY22.
“The increased demand for chartered accountants and income tax consultants reflects the resurgence in economic activity as well as the need for expert guidance to navigate the constantly evolving financial system. We expect the demand to grow in the upcoming year as well,” said Shwetank Dixit, vice-president at Justdial.
Moreso, non-metros such as Indore, Chandigarh, and Lucknow witnessed the highest growth in searches during this period, with growth rates of 72%, 71%, and 59%, respectively.
The period between January and June is crucial for tax returns.
“Based on our experience, the demand for finance professionals peaks in mid-April as people rush to file their tax returns before the deadline. Our firm primarily caters to retail customers, freelancers, and smaller firms, with a turnover of 10 to 30 crore revenue,” said Santhaseelan, the proprietor of V S Santhaseelan & Associates, Chennai.
In the fourth quarter of FY23, there has been growth in searches from areas like Karnal (36%), Mangalore (22%), and Surat (15%) as compared to the third quarter of the same financial year. Among Tier-I cities, Chennai experienced a 12% rise, while Ahmedabad saw a 10% increase. This upsurge in demand is predicted to persist until June-July.
“With the startup ecosystem booming, we have seen a significant spike in demand for CA/IT consultants from new businesses seeking guidance on tax compliance and other financial matters. The demand for finance professionals is expected to grow in the coming years as the Indian economy recovers and more businesses enter the market,” said Santhaseelan.
New regime vs old regime
Budget 2023 has announced that the new tax regime will be the default tax regime from FY24. However, citizens can continue to avail the benefits of the old tax regime. In the old tax regime, taxpayers were eligible to claim a range of deductions, exemptions, and allowances based on their investments.
Some popular deductions and exemptions under the old tax regime include a maximum deduction of ₹1.5 lakh under section 80C of the Income-tax Act, 1961 for investments in instruments such as Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), life insurance premiums, principal repayment of home loans, and so on.
Taxpayers were also entitled to a deduction of up to ₹2 lakh for the interest paid on their home loans under section 24(b), and allowances such as house rent allowance and leave travel allowance.
The income tax slabs under the new tax regime have also been tweaked to make it attractive. Further, the rebate u/s 87A has been increased to ₹7 lakh under the new tax regime. Taxpayers need to look at their tax outgo and deductions that they can claim before choosing a suitable tax regime. Chartered Accountants will have an important role to play in this.
Electronics Mart to Divgi Torq: IPO lock-in period of these 5 companies ends in April
Time for round 2: Extraction 2 & other Hollywood sequels to hit the screens in 2023