For the financial year (FY) 2023-24, the new tax regime is the default option for taxpayers.
Finance Minister Nirmala Sitharman announced some changes in Budget 2024 to the new tax regime by relaxing tax slabs and increasing the standard deduction from Rs 50,000 to Rs 75,000.
Read More:- Income Tax slabs revised: How much tax will you pay on salary of Rs 7L, Rs 10L, Rs 12L, Rs 20L
Despite these changes, some taxpayers may prefer to stick with the old tax regime. For those who wish to opt for the old tax regime, it’s essential to understand how to make this switch correctly.
For the financial year (FY) 2023-24, the new tax regime is the default option. If you prefer to file your income tax return (ITR) under the old tax regime, you need to take specific steps to opt out of the new one.
Read More:- India LTCG at 12.5%! Here’re capital gains tax structures in China, US, others
- Submit Form 10-IEA: If you have income from business or profession, you need to submit Form 10-IEA. This form acts as a declaration to opt out of the new tax regime and is necessary for taxpayers filing ITR-3, ITR-4, or ITR-5 with business income (excluding cooperative societies).
- Tick the option: For taxpayers without business or professional income, the process is simpler. You only need to tick the “opting out of new regime” option in your ITR form. You do not need to file Form 10-IEA if you are filing ITR-1 or ITR-2.
- One-time opportunity: If you have business or professional income, switching between the two tax regimes is limited. Once you opt out of the new tax regime, you can only switch back to it once. After making this choice, you will not be able to revert to the old tax regime in the future.
- Annual switch: Taxpayers with non-business income have more flexibility. They can switch between the new and old tax regimes each year. However, if choosing the old tax regime, it must be done before the due date for filing the return for that year.
- Default regime: Remember, the new tax regime is the default for AY 2024-25. Any previous decisions about which tax regime to choose will not carry over. You will need to make a fresh choice for this assessment year.
Read More:- India’s Tax Regime Set For A Major Upgrade, Govt Puts Income Tax Act 1961 Under Review; Check Key Reasons
Switching between tax regimes requires careful consideration of your income type and adherence to specific filing procedures. Understanding these rules will help ensure that you file your taxes correctly and make the most informed decision regarding your tax regime choice.
