ITR filing 2024: Still want to switch to old income tax regime? Here is how you can do it

ITR filing: The Income Tax department gives a couple of chances to select your income tax regime in a given financial year. In the year 2020, the NDA government implemented a revised tax structure featuring reduced deductions in comparison to the previous tax system. The principal objective behind the introduction of this new tax regime was to enhance the disposable income available to taxpayers. 

Despite this, the Old Tax Regime persists in providing an array of deductions that assist taxpayers in minimising their tax obligations. Deciding between these two tax regimes may prove perplexing for taxpayers, particularly during the investment declaration period.

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When selecting the appropriate tax regime, several considerations come into play, such as your financial and tax-saving objectives. Some individuals may find that the new tax regime enables them to achieve greater savings, whereas the old tax regime might be more advantageous for others. 

The Old Tax Regime not only provides deductions that lessen your tax burden but also fosters a culture of saving. Conversely, the New Tax Regime, characterised by a fewer deductions, streamlines the process of filing taxes and results in an increased amount of disposable income. Individuals with lower earnings and fewer deductions may benefit more from the New Tax Regime.

Making a switch

Any individual generating income from a business or profession is granted a one-time opportunity to transition between tax regimes. If a taxpayer, who is self-employed, chooses to adopt the new tax regime, they are allowed to revert to the old regime just once throughout their lifetime.

To switch tax regimes, these taxpayers are obliged to submit Form 10-IE alongside their Income Tax Return (ITR). Failure to submit Form 10-IE by the initial deadline for filing the ITR will prohibit them from reverting to the old regime for that specific tax year.

It is essential to note that Form 10IE must be filed before proceeding with the submission of the income tax return. Once Form 10IE is lodged, a 15-digit acknowledgment number will be issued. This unique acknowledgment number is mandatory for taxpayers to include when filing their ITR under the new tax regime.

Form 10-IEA

According to the I-T department, Form 10-IEA is a declaration made by the return filers for choosing the 'Opting Out of New Tax Regime'. An Individual, HUF, AOP (not being co-operative societies), BOI or Artificial Juridical Person with business or professional income must submit Form 10-IEA if they wish to pay income tax as per the old tax regime.

Submission of Form 10-IEA is necessary for taxpayers earning income from business or profession who opt to pay income tax under the old tax regime. Specifically, individuals filing ITR-3, ITR-4, or ITR-5 with business income (excluding cooperative societies) must complete and submit Form 10-IEA.

For taxpayers without income derived from business or profession, the option to "opt out of the new regime" in the ITR form suffices, eliminating the requirement to file Form 10-IEA. Therefore, individuals and Hindu Undivided Families (HUFs) filing returns using Forms ITR-1 or 2 are exempt from submitting Form 10-IEA.

It is outlined that taxpayers who earn non-business income have the flexibility to alternate between the new and old tax regimes annually. Nonetheless, in a given year, the selection of the old tax regime is only permissible prior to the deadline for filing the return.

It is crucial to emphasize that the new tax regime is automatically designated as the default option for the Assessment Year (AY) 2024-25. Notably, decisions made in preceding years regarding the selection of tax regimes will not carry over to AY 2024-25.

Tax slabs

The tax slabs under the Old Tax Regime and New Tax Regime 2024-25 are: