Income Tax Return filing: Know who should opt for new tax regime

Income tax return (ITR) filing has already started for FY24. This is the first time when taxpayers receive the benefit of filing ITR from the very first day of April. According to a tweet by the Income Tax India department, "ITR-1, ITR-2, ITR-4 & ITR-6 are available to taxpayers on the e-filing portal from 1st April 2024 onwards and about 23,000 ITRs for AY 2024-25 already filed." ITR-3, ITR-5 & ITR-7 will be made available shortly, according to a post on X.

Since the new tax regime was introduced in the 2020 budget, taxpayers can file their income tax return under one of two tax regimes. When it started, one could select between the old and new tax regimes, but following Budget 2023, the new tax regime has become the default choice. This implies that, as a new taxpayer, the income taxes will be submitted under the new tax regime, unless one opts for the old tax regime.

Although many prefer old income tax regime, there are several methods to save taxes under new tax regimes as well. This has become an appealing alternative since some modifications were made in the previous budget.

Income Tax Return filing: Deductions under new tax regime

1- The first is standard deduction, under which employed people get tax exemption up to Rs 50,000.

2- The second deduction is the investment made in corporate NPS under 80CCD(2). Under this, employees of private companies can invest up to 10 per cent of their basic salary and dearness allowance in NPS and they will receive tax exemption on it. Whereas if one is a government employee, then this figure can go up to 14 per cent.

3- Apart from this, the third deduction is made in Agneepath Scheme under 80CCH. In this, whatever money is invested by the employee or the government in the Agniveer Corpus Fund, is tax free.

New tax regime: Who should shift to a new tax regime?

A person who does not make many investments and is not saving in the form of investment, insurance, medical, NPS, etc under the old tax regime, then the new tax system is better for them. Apart from this, if someone is not paying rent and has not taken a home loan, the new tax regime will be better for them. In the old tax regime, tax exemption is available on all these things up to a certain limit, due to which it seems attractive, but if a taxpayer does not take tax benefit on those things, the new tax regime will be better-suited for them and the income tax will be much lesser.

New income tax regime: How to switch tax regimes?

Follow these steps to change your regime while filing an income tax return.
 
Step 1: Select an old or new tax regime.
Step 2: Check eligibility.

Salaried individuals can pick either regime directly on their ITR form, eliminating the need for extra paperwork. 

Individuals with business/professional income can only move regimes once in their lifetime and must complete Form 10IE by July 31 of the assessment year.

Step 3: Follow these things after fetching eligibility.

For Salaried Individuals:

• Open ITR form (e.g., ITR-1 or ITR-2).
• Locate the section for choosing the tax regime.
• Select the "New Tax Regime" option if applicable.
• Complete the remaining sections of ITR and submit it.

 
For individuals with business/professional income:

• Download and complete Form 10IE.
• Submit Form 10IE by July 31 of the assessment year.
• File ITR by selecting the "New Tax Regime" option.

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