New Tax Regime - New Form 10-IE
If you are opting for the New Tax Regime, the CBDT has issued a notification clarifying that individuals opting for the new tax regime for FY 2020-21 will have to do so by filling a new form, called Form 10-IE.
Form 10-IE will have to filled at the time of filing ITR if an assessee opts for the new tax regime for a particular financial year.
New Tax Regime
Under the New Regime, tax rates are lower. However, you have to forego most exemptions and deductions under the Income Tax Act.
Under the newly inserted section 115BAC of the Income-tax Act, 1961, an individual is required to exercise the option of choosing new tax regime at the time of filing income tax return. However, it was not clear how such option has to be exercised by an individual. To resolve this issue, CBDT has notified this form.
Due date of filing a new form
A. Business Income If you have income from business/ profession, Form 10-IE will have to be filed before the due date for filing ITR (July 31 for most years).
B. No Business Income
If you are a salaried individual/ have no business income, the form can be submitted before/ at the time of ITR filing (even if ITR is filed after the due date).
Switching between Tax Regimes
A. Business Income
Individuals having business income are not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime. Once they switch back, they will not be allowed to opt for new tax regime again.
Essentially, people with business income may have to fill Form 10-IE twice - once to use the new tax regime and the second time to switch back to the old regime.
B. No Business Income
An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year. Therefore, such individuals will have to exercise the option of choosing the new tax regime, if they want to, for every financial year from FY 2020-21 onwards. This means that a salaried individual will have to file this form for every year for which he wants to choose the new tax regime.
Information required in the form
In the notified form, the individual is required to mention the following information:
Name of the individual/HUF
The financial year for which option is exercised
If the individual/HUF has income under business or profession
Date of birth
Nature of business/profession, (mandatory if an individual is having income from business and profession)
E-filing the Form
The notification has clarified that the form will be filed electronically by individuals and HUF who opt for the new tax regime for FY2020-21 onwards. The form will be filed either under digital signature or electronic verification code. However, the income tax department is yet to specify the procedure of filling and verification of the form.
What if I forget to fill the new form?
The Income Tax Department may disallow the benefits available under the new tax regime if you forget to fill the new Form 10-IE. The tax department may calculate your income tax liability based on the existing/old tax regime.
Confused about whether to opt for the new tax regime or old tax regime, sign up in the footer below to get access to our tax regime comparer!