The new tax regime introduced under Section 115BACfor Assessment Year 2024-25 (Financial Year 2023-24) offers lower rates but limits certain exemptions and deductions available under the old tax regime.
Applicability:
New tax regime is applicable to (i) Individuals, (ii) HUF, (iii) AOP, (other than a cooperative society), (iv) Body of Individuals and (v) An artificial juridical person as defined u/s. 2(31)(vii). Section 115BAC is not applicable to Partnership Firms, LLPS, Companies, or Cooperative Societies.
Procedure for AY 2024-25:
Given that the new tax regime is now the default option (with the old regime being optional), taxpayers earning income from business or profession who wish to opt for the old regime must file Form 10IEA by the specified due date. Taxpayers without such income can select their preferred regime when filing their income tax return.
Choices of Changing the Regime in Subsequent Years:
If an individual with income from business or profession chooses the old tax regime for AY 2024-25, they can switch to the New Regime for subsequent AY 2025-26 by filing form 10-IEA. However, once this switch is made, they cannot revert back to the old regime. Individuals without income from business or profession have the flexibility to freely switch between the two regimes by selecting their preferred option when filing their income tax return, without any limitations or restrictions.
The choice made between the new or old regime in the earlier Assessment Year 2023-24 will not affect the ability to opt for the old regime in Assessment Year 2024-25 onwards.
Intimation by Employee to Employer:
It is important for a salaried employee to inform their employer of their preferred tax regime. Failure to do so will result in the employer deducting TDS according to the default new tax regime.
Consequences of Non-Filing of Form 10-IEA:
If a taxpayer earning from business or profession fails to submit Form 10-IEA by the return filing deadline, they lose the ability to opt for the old tax regime. Ensure compliance to make informed decisions about your tax strategy. Therefore, it is crucial to understand the implications of the new tax provisions for effective financial planning.
