Switch Tax Regime: If you have filed your ITR under the new tax regime last year, but this time you have increased investments or have taken a home loan, then to avail exemption on these, you will have to file ITR in the old tax regime.
Switch Tax Regime: This time nothing special came out for the taxpayers in the Union Budget 2023-24. The new tax regime has now become the default regime and still many tax benefits have not been included in this regime. In such a situation, a large number of taxpayers are still in the mood to file income tax returns under the old tax regime. If you have filed your ITR under the new tax regime last year, but this time you have increased your investments or have taken a home loan, then to avail exemption on these, you will have to file ITR in the old tax regime. For this you can switch your tax regime.
What are the rules for switching tax regime?
The new tax regime was made the default in Budget 2023. This means that if you do not choose your tax regime yourself, your tax will automatically be calculated under the new tax regime. But you have the right to switch your tax regime before the due date of filing ITR. Salaried employees have the option to change their tax regime every financial year as per their wish, whereas those having business income, i.e. taxpayers whose income comes from a business, will have this option only once to change the tax regime. Can switch regime.
Change your tax regime in 3 steps
Step 1: First choose your tax regime
See which regime benefits you more. In the new tax regime, you will get a lower tax rate, but most of the deductions and exemptions will not be available. Tax rates are high in the old tax regime, but here you get tax exemption on many types of investments, expenses and other things.
Step 2: Check your eligibility
1. Know whether you need any documentation to switch tax regime. Salaried employees do not need to fill a separate form to switch the regime, while filling their ITR form, they can first tell in which regime they are filing the return.
2. If you earn income from business, you can switch tax regime only once in your life and for this you will have to fill Form 10IE before 31st July in the assessment year.
Step 4: How to choose tax regime?
Salaried employee will have to follow these steps-
- Open your ITR form.
- You might have been asked somewhere above which regime you are choosing.
- Choose the regimen as per your choice here.
- Now fill your ITR, verify it and submit it.
Those having business income will have to follow these steps-
- Download and fill online Form 10IE.
- Fill it before 31st July of the assessment year.
- Now choose the tax regime as per your choice and fill the ITR.
If those with business income are switching back to the old tax regime, then they will get this option only if they have never switched back before. It is also worth keeping in mind that they cannot take tax exemption under the old regime in the current year’s return.
Fill your ITR carefully and submit it only after checking. Keep in mind that the last date for filing income tax returns for FY 2023-24 (AY 2024-25) is July 31, 2024.
