Form 10IE to opt for new tax regime
From Assessment Year 2021-22 and onwards, taxpayers have a choice to furnish the income tax return by opting for either the existing tax rates or the concessional tax rates. The taxpayers who wish to switch from the existing tax regime to the new concessional tax regime or vice versa will have to furnish Form 10IE.
Form 10-IE is now made available on the IT portal to be filed electronically.
What is Form 10-IE?
Form 10-IE is an electronic application form to be filed by the taxpayers to inform the choice to CBDT of either exercising or withdrawing to pay tax under section 115BAC of the Income-tax Act, 1961.
CBDT issued a notification no. 82 dated 1st October 2020 to notify the Form 10-IE under section 115BAC(5)(i) of the Income-tax Act, 1961.
Note: Assessee will not be permitted to withdraw after exercising the option for that particular assessment year.
What is the time limit for filing Form 10-IE?
Form 10-IE should be furnished before the due date of furnishing the return u/s 139(1). Click to know the extended due date u/s 139(1).
Note: If the assessee fails to apply before the due date there is no option to pay tax at concessional tax rates.
Note: If the application to exercise/withdraw was furnished within the time frame, then the assessee can claim the benefit even if
the return is filed after the due date.
Who can file Form 10-IE?
Only Individuals and Hindu Undivided Family are eligible to avail the benefit of concessional tax rates u/s 115BAC. Hence only Individuals or Hindu Undivided families can furnish Form 10-IE.
Note: It is mandatory to file Form 10-IE in the case taxpayer is furnishing the return of income in ITR-3 or ITR-4. But the option to select the new tax regime will be available in the return itself if the taxpayer is furnishing the return of income in ITR-1 or ITR-2.
What information is required in Form 10-IE?
The following information is to be furnished by the taxpayer in Form 10-IE
- Name of Individual or HUF
- Date of Birth/Incorporation
- Nature of Business/Profession
- Confirmation of whether the assessee earns an income under the head of PGBP or not
- Confirmation of whether the assessee has any Unit in the International Financial Services Centre. If yes then the following details
- Name of Unit
- Address of Unit
- Nature of Activities
- Confirmation of whether the assessee had exercised the option of paying concessional tax u/s 115BAC. If yes then the following details
- Assessment Year
- Date of submitting Form 10-IE
- Self Declaration
Can assessees having income from business or profession switch between the tax regimes?
Assessees having income from business or profession do not have an option to switch between the old tax regime to the new tax regime in every assessment year. They can exercise the option to pay tax as per the new tax regime by furnishing the application in Form 10-IE. They can switch back to the old tax regime by furnishing the application in Form 10-IE for withdrawal to pay tax as per the new tax regime.
Note: The option to exercise the new tax regime and switching back to the old tax regime can only be used ONCE by the assessees having income from business or profession.
Note: If an assessee ceases to have income from business or profession then such assessees will be treated at par with other assessees and will be given an option to withdraw or exercise between old and new tax regime.
Can assessees who do not have business income switch between the tax regimes?
Assessees who do not have business income or have income other than the business income can switch between the tax regime in every assessment year.
Note: The option to exercise or withdraw from the new tax regime is to be furnished for EVERY assessment year in Form 10-IE before the due date prescribed u/s 139(1).
Note: Salaried Individuals can exercise the option to pay tax at concessional rates even if the employer has deducted tax on the old/existing tax rates.
Do you have to mention in the ITR whether you are opting for the new or old tax regime?
YES. In the Part- A General Information, the assessee will also have to also answer to the question “Are you opting for new tax regime u/s 115BAC?” in yes or no.