ITR filing 2024: Taxpayers, it's time to focus on one of the most crucial tasks: filing your Income Tax Return (ITR). The filing season for Income Tax Returns 2024 has begun, and meeting the July 31 deadline is crucial to avoid penalties.
Filing your ITR for the financial year 2023-24 involves essential decisions if you're considering switching tax regimes. The government introduced a new tax regime to simplify the structure and lessen the tax burden, but it has garnered mixed reactions from taxpayers. Choosing between the old and new tax regimes can be intricate, depending on income, deductions, exemptions, and long-term financial plans. Individuals without investments tend to favour the new tax regime, while those with financial goals and investments often stick with the old regime.
Here’s a detailed overview of the implications, choices, and steps you should understand before making decisions.
When you file your income tax return, the default option is the new tax regime, but you can switch to the old tax regime during the filing process.
According to Garima Tripathi, a partner at V Sahai Tripathi and Co., Chartered Accountants, salaried individuals can switch their tax regime once a year, specifically when filing their return.
"Those earning income from business or profession, such as trading options or futures, can switch out of the old tax scheme once but cannot revert to it again," explained Garima Tripathi.
The old tax regime includes exemptions such as HRA, LTA, and Chapter VI-A, while the new regime offers a lower tax rate but eliminates most exemptions and deductions. "In this situation, it's advisable for individuals to calculate their tax liability by considering their investments and eligible deductions. Taxpayers can use online calculators or seek advice from a tax professional to assess their tax payable under both regimes," explained Milin Bakhai, Associate Partner, Direct Tax, N.A. Shah Associates.
The new tax regime was introduced as the default option in Budget 2023. Taxpayers with income from business and profession who choose the old tax regime must file Form 10IEA with their income tax return. For taxpayers without income from business and profession, opting for the old regime in their income tax return is mandatory, according to Milin Bakhai, Associate Partner, Direct Tax, N.A. Shah Associates.
Under the old tax regime, income up to ₹5 lakh was exempt from taxation due to tax slabs and rebates. This threshold has been increased to ₹7 lakh in the new tax regime.
Garima Tripathi mentioned that under the new system, the 37% surcharge on income exceeding ₹5 crore has been reduced to 25%.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
