In the Budget 2023, the new tax regime was declared to be the default tax regime. In simple terms, all the individuals who want to choose the old tax regime, need to select the option specifically by going through the required process. Form 10IEA is a form that can be used by taxpayers to exercise their right to choose between the old or the new regime. By filling this form, the taxpayers can inform the income tax department of their choice regarding the tax regime.
- Individuals having income from business and profession have to mandatorily submit Form 10-IEA within the specified time frame under section 139(1) if they want to switch their tax regime from new to old.
- Filling out Form 10-IEA requires individuals to provide all the necessary information like PAN number, assessment year, name, and current status. These details can be used to accurately categorize and identify taxpayer information.
- Another important aspect of Form 10-IEA is the individual’s choice to either opt out of or re-enter the default new tax regime. This choice determines the rules and regulations that will apply to the Form 10-IEA.
- Individuals are also required to specify the relevant dates from which they want to opt out or re-enter the new tax regime while filing Form 10-IEA.
- Collecting all this information and writing down the relevant dates and choices of individuals helps the government maintain transparency in Form 10-IEA. It not only helps determine the taxpayer’s tax regime preference but also helps them maintain accurate and up-to-date tax records.
Earlier, till 2022-23 when the new tax regime was not the default tax regime, individuals had to file Form 10-IE to specify their willingness to choose the new tax regime. However, starting FY 2023-24, the new tax regime has been set as the default tax regime. This means that if the taxpayer does not specify their intent to choose the old regime, they will be automatically enrolled in the new regime.
The default new tax regime indicates that individuals without any professional or business income can opt out of the new tax regime directly at the time of filing tax returns. The new form can be used to indicate the preference for the old tax regime by individuals.
The revised procedure offers a more efficient method for individuals without business or professional income who prefer the traditional tax regime. They no longer have to go through the extra step of filing Form 10-IE. Instead, they can directly express their preference during the tax return filing process by choosing the relevant option.
Choosing the Old Tax Regime
Taxpayers who do not have any income from business or profession can choose the old tax regime by simply clicking the old regime checkbox at the time of filing ITR. However, for those who have income from business/profession, it is mandatory to fill Form 10-IEA to opt for the old regime before the ITR filing due date, i.e. 31st July.
Form 10-IEA should be filed before filing your income tax return. An acknowledgment number will be generated and provided to you after filing Form 10-IEA. Any individual having business income and willing to opt for the old regime can file this form by the due date i.e. Form 10-IEA.
There should be proper verification and validation of the Form 10-IEA. This can be done using a digital signature or an electronic verification code. This verification process helps ensure that the information presented is legitimate and authentic while preventing fraudulent activities.
Form 10-IE, which was earlier employed to opt for the new tax regime has now been discontinued after the introduction of the new tax regime as the default tax regime. Form 10-IE was applicable upto FY 2022-23. However, this discontinuation was also in line with the newly introduced Form 10-IEA that can be filed to select the old tax regime.
Form 10-IEA, introduced by the CBDT for selecting the old tax regime, mandates taxpayers to furnish the following vital information:
Name: Taxpayers must furnish their full name as recorded in official documents. It is necessary to ensure alignment between the name in Form 10-IEA, PAN card, and other relevant records.
Permanent Account Number (PAN): Taxpayers are required to provide their PAN, a unique identification number assigned by the Income Tax Department. Accurate entry of PAN is crucial as it serves as an important identifier in Form 10-IEA.
Assessment Year (AY): Taxpayers should specify the relevant Assessment Year for opting for the old tax regime. The Assessment Year follows the Financial Year under assessment. For instance, if an individual chooses the old tax regime in FY 2023-24 the corresponding assessment year is AY 2024-25.
Opting Out or Re-entering the Default New Tax Regime: Taxpayers must indicate if they are opting out of the default new tax regime or re-entering it. This decision governs the applicable tax rates, deductions, and exemptions for their income.
Relevant Dates: Form 10-IEA necessitates taxpayers to specify the dates for opting out and entering the new regime. Precision in mentioning these dates is crucial for clarity and adherence to prescribed timelines, ensuring they fall within the applicable Financial Year.
Hope this article helped you get insights into Form 10-IEA and its various aspects. So, if you wish to continue with the old tax regime, don’t forget to file Form 10-IEA before the ITR filing due date, i.e., 31st July 2024. Also, Form 10-IEA can only be filed electronically either using a digital signature or an electronic verification code. If you still have doubts or need assistance with anything tax-related, Tax2win’s tax experts are here to guide you through every step.
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