FILING OF FORM 10-IE: CONDITION FOR AVAILING NEW TAX REGIME?

FILING OF FORM 10-IE: CONDITION FOR AVAILING NEW TAX REGIME?

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FILING OF FORM 10-IE: CONDITION FOR AVAILING NEW TAX REGIME?

 

The new regime of taxation as was announced by Finance Act 2020 is contained in section 115 BAC which is forming the part of Chapter XII of the Income Tax Act-1961. Section 115 BAC is applicable to Individual & HUF Only. In short, it is not applicable to other categories of taxpayers. If the trust or AOP is taxable at the rate applicable to individuals then it will be compulsorily taxed at the old tax regime and cannot be subject to the new tax regime.
The key features of new taxation regime as incorporated in section 115BAC (which provides for taxation at a special tax rate) is as under:
Total Income
Rate of tax
Upto Rs. 2,50,000
NIL
From Rs. 2,50,001 to 5,00,000
5%
From Rs. 5,00,001 to 7,50,000
10%
From Rs. 7,50,001 to 10,00,000
15%
From Rs. 10,00,001 to 12,50,000
20%
From Rs. 12,50,001 to 15,00,000
25%
Above 15,00,000
30%
 
For above new tax rate and slab, the following points may be noted:
  1. The new tax regime is applicable from A.Y. 2021-22 onwards.
  2. The new tax regime is optional.
  3. The new income tax regime is applicable to only Individual & HUF. It is applicable irrespective of their age means the tax slab is also applicable for Senior Citizen and super senior citizens.
  4. Rebate u/s 87 A is available for individuals having Total Income less than Rs 5 lakh.
  5. Most importantly, following deduction are available only if the taxpayer is opting for old regime and is not Allowed if the person is opting for new tax regime:
  • Standard deduction to salaried taxpayers;
  • Leave Travel Allowance (LTA);
  • House Rent Allowance (HRA);
  • Children education allowance;
  • Other special allowances [Section 10(14)];
  • Deduction from family pension income;
  • Interest on housing loan on the self-occupied property or vacant property (Section 24);
  • Chapter VI-A deductions;
  • Exemption or deduction for any other perquisites or allowances;
  • Without setting off any loss carried forward or unabsorbed depreciation of earlier year;
  • No Depreciation u/s 32 [except clause (iia) of sub-section (1)] allowed;
  • Exemption for SEZ unit u/s 10AA;
  • Deductions u/s 32AD, 33AB, 33ABA, 35, 35AD, 35CCC;
  • In case of a Self-occupied property, you cannot claim a deduction on interest for a housing loan.
Deduction Allowed while Opting NEW TAX REGIME: –
  • Deduction u/s 80CCD (2) (employer’s contribution to your pension account);
  • Deduction u/s 80JJAA (additional employee cost);
  • Transport Allowance for Differently Abled Employees (Divyang);
  • Conveyance Allowance for performance of office duties;
  • Any Allowance for the cost of Travel/ Tour/ Transfer;
  • Daily Allowance given to employees under certain conditions.
 
As far as the option to switch between Old & New regime is concerned, the following points may be noted
  1. Option in case of Individual & HUF having Business Income:
    a) Individual & HUF having business income have the option to switch to a new regime only twice in a lifetime.
    b) In short, once such Individual & HUF chose the new tax regime then such person will not be able to opt for New Tax Slab Again except for one more occasion.
    c) Only exit option for such individuals /HUF could be there when such person ceases to have any business income.
  2. Individual having salaried and no business Income:
    Individual having salary income with no business income have option of free entry & free exit i.e., have free choice to choose between the old tax slab and new tax slab every year i.e., he/she can switch regimes from year to year.

 

FILING OF FORM 10-IE: CONDITION FOR AVAILING NEW TAX REGIME?
  1. The person having income from Business & profession are compulsorily required to file Form No. 10IE before filing the income tax return if such person wants to opt for new tax regime.
  2. The benefit of the new tax regime shall not be available if the option is not exercised on or before the due date of filing income tax return u/s 139(1). The taxpayer can file the ‘Form 10-IE’ electronically from the income tax e-filing portal. You can furnish the said form either under digital signature or through Electronic Verification Code (EVC).If Form 10IE is not filed, then the department will calculate tax based on the old/existing tax regime.
  3. There is no such condition for Individual / HUF if they don’t have any Income from Business & Profession. They can opt for the new tax regime by just clicking it in ITR Form No. 1 & 2. Such persons are not required to file 10IE at the income tax portal for opting for the new tax regime.

1 Comment

  1. September 17, 2021
    Avtar Singh

    Simple and soft way for elaborate the section. All the best and Regard

    Reply

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