Jul 29, 2024 06:44 PM IST
All those with non-business income can chose to alternate between the old tax regime and new tax regime once a year
The current income tax rules does provide the freedom for taxpayers to choose between the new tax regime and the old tax regime based on whichever may be more advantageous to them.
Is it possible to switch to the old tax regime after choosing the new tax regime?
All those with non-business income can chose to alternate between the old tax regime and new tax regime once a year
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But this isn’t possible for those who earn a living out of business or profession. Once they choose a regime, the current rules state that its applicable lifelong and cannot be changed.
Is the old tax regime or the new tax regime better?
The two regimes offer almost equivalent benefits, but these benefits vary with income levels.
For instance, the old regime may work better for those with substantial investments in tax-saving instruments. However, the new regime offers a simpler tax structure, but without some deductions.
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The old tax regime provided various deductions and exemptions such as house rent allowance (HRA), and Leave Travel Allowance LTA, which can be advantageous for people who can claim deductions under these.
Steps to switch between the two tax regimes?
The new tax regime is the default option for the Assessment Year (AY) 2024–2025 and taxpayers will be automatically assessed under this regime if they don’ choose on their own.
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- Taxpayers must submit Form 10-IE along with their income tax returns to switch tax regimes, but this has to be done before the deadline, or it won’t be possible to switch regimes for that entire financial year.
- After submitting the Form 10-IE, a 15-digit acknowledgement number will be issued, and this has to be included when filing the income tax return.
What is Form 10-IEA?
Form 10-IEA is for taxpayers who earn from a business or profession, file taxes through ITR-3, ITR-4, or ITR-5, and wish to opt out of the new regime and remain with the old regime
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 are eligible to use it.