In Budget 2024, the central government has sweetened the new tax regime with more slab relaxations and an increase in the standard deduction from ₹50,000 to ₹75,000. However, despite the changes introduced in Budget 2024 in the rates under the new tax regime, there are taxpayers who would want to opt for the old tax regime.
Since the new tax regime is the default regime in FY 2023-24, the taxpayers are supposed to switch to the old tax regime if they want to file their income tax return under the old one. To do this, taxpayers have to first opt out of the new tax regime.
For this, taxpayers are supposed to submit Form 10-IEA, which is a declaration for choosing the ‘opt out of new tax regime’ feature.
If you are one such taxpayer, it is imperative to familiarise yourself with the following provisions:
I. Submit Form 10-IEA: Taxpayers with income from business or profession must submit Form 10-IEA if they wish to pay income tax as per the old tax regime. In other words, only those who file ITR-3, ITR-4 or ITR-5 have to submit Form 10-IEA if they have business income (other than cooperative societies).
II. Tick the option: Taxpayers who do not have income from business or profession need to tick “opting out of new regime” in the ITR form without the need to file Form 10-IEA. In other words, individuals and HUFs filing their returns in Forms ITR-1 or 2 are not required to submit Form 10-IEA.
III. One chance only: Taxpayers with business or professional income are not eligible to switch between the two regimes every year. If they opt out of the new tax regime once, they get only one chance to switch to the new regime. Once they switch back to the new regime, they won’t be able to choose the old regime anytime in future.
IV. Each year: However, taxpayers with non-business income can switch between the new and old tax regimes every year. But in the same year, the old tax regime can be selected only before the due date of filing the return.
V. Default regime: It is vital to note that the new tax regime is the default regime for AY 2024-25. Any action taken in the previous years regarding the choice of regimes will not be applicable for AY 2024-25.