There has been a lot of buzz around the New & Old Tax Regime, since it was announced by the finance minister Nirmala Sitharaman in Budget 2020.
Where under the Old Tax Regime, you can take advantage of the itemized deductions, as per the old slab rates. The New Tax Regime offers lower tax rates, but you need to let go of the itemized deductions.
Now, how can you opt for the New Tax Regime? Where you have more freedom to chart out your financial goals.
If opting for the New Tax Regime, you need to file Form 10-IE before filing the Income Tax Return.
What is Form 10-IE?
Any taxpayer opting for the New Tax Regime, is required to file Form 10-IE, released by the The Central Board of Direct Taxes (CBDT).
The aim for this form is to tell the Income Tax Department, your choice of the Tax Regime. If you are opting for the New Tax Regime you need to indicate your preference under Section 115BAC by filing Form 10-IE.
If you choose to continue with the Old Tax Regime, you do not need to file Form 10-IE.
You can switch between the two regimes, every year if you have any income other than business income.
Switching Between Regimes
If you have any income other than business income, then you have the option of switching between regimes every year. You must file the Form 10-IE, every time you opt-in or continue with the New Tax Regime.
In case you have a business income you can not switch between the regimes every year, but you still need to indicate your preference for the said financial year before filing the ITR.
Information Required in Form 10-IE
Here’s a list of all the information you need to keep in handy while filling the form:
- Name of the individual/HUF
- Confirmation – Whether the individual/HUF has any income under the head profit or gains from business or profession
- Date of Birth/Incorporation (in dd/mm/YYYY format)
- Nature of Business/Profession
- Confirmation – If taxpayer has any unit in International Financial Services Centre (IFSC), as referred to in sub-section (1A) of section 80LA. (if yes, the details have to be provided)
- Details of the previous form 10-IE filed (If applicable)
Due Date to Submit Form 10-IE
The Due date to file ITR is 31st July in case tax audit is not applicable.
Forgot to File Form 10-IE?
If you forget to file Form 10-IE, then the Income Tax Department may disallow you to avail the tax rates under the New Tax Regime. The Income Tax Department may then calculate your income tax liability based on the existing/Old Tax Regime.
E-Filing of Form 10-IE
You have to file the form electronically on the IT Portal. You can either use a digital signature certificate or electronic verification code for the same.
ITR 1 and ITR 4 utilities are already out. We have observed that we have to mention the filing details of Form 10-IE, i.e., date of filing Form 10-IE and acknowledgement number of the form filed while filing in the income tax return.
So, if you are opting for the New Tax Regime, it is important you file Form 10-IE. Ensure that you furnish all the information required in the form timely, to avoid any hiccups in the future.
Got questions around Form 10-IE? Shoot’em at TaxQ&A and we’ll answer them in the simplest way possible.