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ITR Filing: As the deadline for filing Income Tax Returns (ITR) draws near, many taxpayers might be mulling to switch back to the old tax regime in order to save as much money on taxes as they legally can. Luckily, the Income Tax Department has given taxpayers an option to choose the old tax regime based on 2020 tax reform, which had lower tax rates and a more straightforward tax structure.
In order to switch between tax regimes, a taxpayer must submit their ITRs along with Form 10-IEA which is must be filled to choose your preferred tax regime for that financial year. Taxpayers wishing to switch tax regimes must fill up and submit Form 10-IEA before the ITR deadline, failing which they will not be able to go back to old tax regime for that particular year.
A 15-digit acknowledgement number is issued after the submission of Form 10-IEA, which serves as proof that the taxpayer has switched tax regime for that year, and must be included when filing ITR under the chosen tax regime.
Note: The acknowledgement number is mandatory for filing ITR under the new tax regime.
Taxpayers with business or professional income who wish to switch back to old tax regime, are required to submit the Form 10-IEA to indicate their preference.
The form can be filled by individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs) (excluding cooperative societies), Bodies of Individuals (BOIs), and artificial juridical persons with business or professional income.
In order to avail benefits under the old tax regimes, taxpayers must fill up and submit the form before ITR filing deadline. Any individuals or body of individuals, filing an ITR-3, ITR-4, or ITR-5 with business income (cooperative societies excluded), must submit the said form.
Taxpayers who who do not fill up Form 10-IEA will be automatically taxed under the new tax regime for the Assessment Year (AY) 2024–2025. Notably, your previous choice for your preferred tax regime is final.
The new tax regimes has lower tax rates and revised slabs but does away with many of the exemptions and deductions which could benefit some classes in the old tax regime.
Taxpayers cannot claim various exemptions such as HRA, LTA, Section 80C, Section 80D, among other under the new tax regime, albeit tax rates are lower than old regime.
In the old tax regime, these exemptions can be availed which can significantly reduce taxable income for those who qualify for these benefits.
Under the old tax regime, a progressive tax structure is followed in which higher income means higher taxes and vice-versa.
A full tax rebate is offered on an income of upto Rs 7 lakh under the new tax regime, compared to the old tax regime which has a threshold of Rs 5 lakh.
Both old and new tax regimes offer a standard deduction of Rs 50,000 for salaried employees.
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