Old to New Tax Regime: There has been a major change in the income tax slab rate in the budget for the next financial year 2023-24. Under the new tax system, income up to Rs 3 lakh is tax-free. Apart from this, now no tax will have to be paid on income up to Rs 7 lakh i.e. the tax rebate limit has been increased to Rs 7 lakh.
Old to New Tax Regime: Union Finance Minister Nirmala Sitharaman announced a major change in the income tax slab rate in the budget for the next financial year 2023-24. Under the new tax system, income up to Rs 3 lakh has been made tax-free. Apart from this, earlier no tax had to be paid on income up to Rs 5 lakh, which has now been increased to Rs 7 lakh i.e. the limit of tax rebate has been increased from income of Rs 5 lakh to Rs 7 lakh. According to Finance Minister Sitharaman, the new tax system is better and less complicated. Now the question arises that if you have chosen the old tax system then how to shift to the new tax system.
How to shift from old to new tax system
Usually, the decision about the old or new tax system is taken at the beginning of the financial year itself. However, if taxpayers have chosen the old tax system and now see benefits in the new tax system, then they can shift while submitting the income tax return. According to Archit Gupta, founder and CEO of Clear, which provides tax filing assistance, if any taxpayer has business income along with salary, then they should submit Form 10-IE. Submission of this form means that the taxpayers have either opted for the new tax system or have decided not to opt.
According to Gupta, if any taxpayer wants to enter or exit the new tax system and has profits and gains from business-profession, then he must file Form 10-IE. However, if there is no income from company or profession, then you can easily choose the new tax system while submitting ITR-1 or ITR-2.
Which form to choose
According to Sujit Bangar, creator of Tax Buddy, another platform that provides assistance in tax filing, if salaried employees are involved in any business activity, then their income will come under Salary and Profit and Gain from Business and Profession (PGBP). PGBP stands for earnings from shares trading, F&O, commodities or commodities derivatives, freelancing, earning through YouTube or other types of content publishing platforms, etc.
According to Bangar, if a taxpayer has both salary and business income, then he should show both types of income under separate heads i.e. Salary Income and PGBP. Combining these two will be the overall revenue. Such taxpayers will have to submit both ITR-3 and ITR-4 and declare both business and salary income.
