Finance Minister Nirmala Sitharaman introduced a new tax regime in the Union budget 2020 that offers lower tax rates for individuals who forego most of their exemptions and deductions. This new regime received mixed reactions from taxpayers. In case you are looking to change your tax regime, you need to file the Form 10IE.
In this blog, we explore the components, timelines and application process for Form 10IE.
The Old Tax Regime pertains to the method of calculating income tax based on the traditional income tax brackets. Under this regime, taxpayers have the option to utilize approximately 70 exemptions and deductions offered by the Income Tax Act (such as deductions under Section 80C and 80D), along with other tax advantages like HRA (House Rent Allowance), LTA (Leave Travel Allowance), and more.
The New Tax Regime offers lower tax rates but fewer exemptions and deductions compared to the existing or old tax regime. This change was introduced as part of the government's initiative to simplify the tax system and make it more user-friendly for taxpayers.
Before filing their Income Tax Returns, taxpayers are required to indicate their chosen tax regime by notifying the Income Tax Department through Form 10 IE.
This option to select between the Old Tax Regime and New Tax Regime is applicable to individuals and Hindu Undivided Families (HUF) with income falling under the PGBP (Profit and Gains of Business or Profession) category.
Form 10IE is a digital application form that taxpayers are required to complete for their decision to opt for the new tax regime to the Central Board of Direct Taxes (CBDT).
Please be aware that once you have chosen the new tax regime for a given financial year, it must remain the same financial year.
The time limit for filing Form 10IE is before the due date for filing the income tax return.
It has to be submitted before going for income tax return as an acknowledgement number of 15-digital is provided, which is essential to proceed with the ITR filing as per the new regime.
Some basic details that you need to fill in are listed below:
Follow the given steps for filing for the new tax regime with Form 10IE online:
The taxpayer is requested to note the acknowledgement number and Transaction ID for future reference.
Follow the given steps for filing for the new tax regime with Form 10IE offline:
While you decide between the old and new regimes, look at your finances with Fi Money. Know and grow your finances with our Fi Analyzer. Get insights into your monthly, weekly, and daily expenses to make sound choices in the future.
Taxpayers can fill out Form 10IE by visiting the income tax website and logging into the portal. Be very mindful while sharing your details, and cross-check every detail twice before submitting the application.
To make a choice, visit the official website of the income tax department and make use of a tax calculator to find out your taxable income under both regimes. With that knowledge, decide which is better for you.