The Central Board of Direct Taxes (CBDT) has announced procedural changes for business owners and professionals, thereby allowing them to continue with the old tax regime from FY 2023-24. This move comes as the new tax regime becomes the default option, thus making it essential for individuals with business income to understand the process.
To opt for the old tax regime in the current financial year, they will have to fill out Form 10-IEA, CBDT said in a release. This form enables businessmen and professionals to choose the previous tax regime and take advantage of applicable tax exemptions and deductions.
The CBDT release said that to opt out of the new tax regime, such a person having income from business or profession should submit Form 10-IEA “on or before the due date specified under sub-section (1) of Section 139 of the Income-tax Act, 1961 for furnishing the return of income for such assessment year.”
Form No. 10-IEA requires individuals to provide essential details, such as name, Permanent Account Number (PAN), assessment year, and status. The form also asks if the individual is opting out of the default new tax regime or re-entering it, along with relevant dates of opting out and exercising the option.
Till FY22-23, such individuals were required to submit Form 10IE to opt for the new tax regime.
However, this form was withdrawn, as the new tax regime becomes the default option from FY 2023-24. Now, business owners or professionals will have to specifically opt for the old tax regime if they wish to continue with it. They will have a one-time opportunity to switch to the new tax regime, but once they do, they cannot go back to the old regime.
Individuals must verify Form No. 10-IEA at the time of submission using either a digital signature or an electronic verification code, the release said.
Says Mayank Mohanka, FCA, partner, S M Mohanka & Associates and Founder, TaxAaram.com: “From FY 2023-24 (AY 2024-25), the new personal tax regime u/s 115BAC (1A), has become the default regime. So, taxpayers not carrying on any business or profession can opt for old regime simply by ticking the old regime checkbox in their ITR forms, while filing their ITRs, while taxpayers carrying on business and profession can opt for old regime by filing an electronic declaration in the prescribed form u/s 115BAC(6), before filing of their ITRs.”
He adds: “Taxpayers having income from business or profession who have exercised the above option of shifting out of the new regime by filing their declaration under 115BAC (6) shall be able to exercise the option of opting back to the new regime u/s 115BAC (1A) only once. However, a person not having income from business or profession shall be able to exercise this option every year. CBDT vide notification No 43/2023 dated 21.6.2023 has inserted a new Rule 21AGA to notify the prescribed Form 10-IEA to be filed by such Taxpayers carrying business or profession and opting for the old regime. Such Taxpayers can withdraw from old regime only once by again filing the prescribed Form 10-IEA.”
The deadline for filing income tax returns (ITRs) is July 31, 2023.
The income tax department has launched online forms ITR-3, ITR-2, ITR-1, and ITR-4. ITR-3 form is the most recently released form for individuals and Hindu Undivided Families (HUFs) with business or professional income.