Opting New Tax Regime- Know the form You need to file

As we all aware that one of the most important amendment brought by Finance Act, 2020 is the New Tax Regime with lower rate of tax introduced mainly for individual, HUF and Co-operative Societies. Now CBDT by issuing notification has clarified regarding the compliance requirement to opt for this new tax regime. The Notification No 82/2020 dated 01 October, 2020 has covered it in detail. Today in this article we will discuss in detail these new rules of compliance.

What are 2 new sections and what is the date of Applicability?

Section 115BAC: New Tax Rate for income of individuals and Hindu undivided family

As per this section, the Individual and HUF have an option to opt for this new tax regime but subject to sacrificing the following allowances or deductions:

• Standard deduction of Salaried people
• Leave Travel Allowance (LTA)
• House Rent Allowance (HRA)
• Children education allowance
• Other special allowances [Section10(14)]
• Deduction from family pension income
• Interest on housing loan on the self-occupied property or vacant property (Section 24)
• Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJAA)
• Exemption or deduction for any other perquisites or allowances
• Without setting off any loss carried forward or unabsorbed depreciation of earlier year
• No Additional Depreciation u/s 32(2) allowed

The Tax Rate as per New Tax Regime are as under:

Total Income	Rate of tax
Upto Rs. 2,50,000	Nil
From Rs. 2,50,001 to Rs. 5,00,000	5%
From Rs. 5,00,001 to Rs. 7,50,000	10%
From Rs. 7,50,001 to Rs. 10,00,000	15%
From Rs. 10,00,001 to Rs. 12,50,000	20%
From Rs. 12,50,001 to Rs. 15,00,000	25%
Above Rs. 15,00,000	30%

Section 115BAD: New Tax Rate for Co-operative Society

As per this section, the Co-operative Society have an option to opt for new tax regime under which tax at the rate 0f 22% can be charged in the place of existing tax rate of 30% but subject to sacrificing the following allowances or deductions:

• Deduction u/s 10AA or 32(1)(iia) or 33AB or 33ABA or 35AD
• Deduction for Investment allowance u/s 32AD
• Chapter VI-A deduction (80C,80D, 80E and so on) (Except 80JJAA)
• Exemption or deduction for any other perquisites or allowances
• Without setting off any loss carried forward or unabsorbed depreciation of earlier year
• No Additional Depreciation u/s 32(2) allowed

These both the sections are come into implementation with effect from 01 April, 2021 i.e from AY 2021-22.

What is New Compliance Requirement for Section 115BAC and Section 115BAD?

CBDT vide Notification 82/2020 dated 01 October, 2020 has inserted two new forms as a mandatory compliance before opting for this new tax regime.

FORM No. 10-IE – Application for exercise/ withdrawal of option under clause (i) of sub-section (5) of section 115BAC of the Income-tax Act, 1961

FORM No. 10-IF- Application for exercise of option under sub-section (5) of section 115BAD of the Income-tax Act, 1961.

This form has to be mandatorily filed by the Individual or HUF or Co-operative society just to inform the government that they are opting for new tax regime.

When is Form 10-IE required to be filed?

1. As per Section 115BAC, an individual or HUF having business income shall submit this form on or before the due date of filing ITR.

And for all other individuals or HUF, the form can be submitted alongwith ITR filing.

2. As per Section 115BAD, the co-operative society shall submit this form on or before the due date of filing ITR.

Important Notes:

1. Once individual or HUF having business income opt for this new tax regime, can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise option under this section, except where such person ceases to have any income from business or profession in which case, option other than business income shall be available.
2. Once Co-operative Society has exercised the option of new tax regime for any previous year, it cannot be subsequently withdrawn for the same or any other previous year.

In what manner Form 10-IE and Form 10-IF required to be furnished?

The option in Form No. 10-IE and Form No. 10-IF shall be furnished electronically either under digital signature or electronic verification

The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall, –

(i) specify the procedure for filing of Form No. 10-IE and Form No. 10-IF

(ii) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule (2), for verification of the person furnishing the said Form; and

(iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the Form

The important point here to note that the Forms are just notified by the CBDT it is still not available on Income Tax Website, but expected to be available soon.

What all details are required to be furnished in Form 10-IE or Form 10-IF?

Details required in Form 10-IE

• Name of the individual/HUF
• Address
• PAN
• If the individual/HUF has income under business or profession
• Date of birth
• Nature of business/profession, (mandatory if an individual is having income from business and profession)
• Whether the individual/ HUF has any Unit in International Financial Services Centre (IFSC), as referred to in section 80LA(1A), and if the answer is affirmative then provide details of unit such as name, address and nature of activities undertaken
• Whether option under clause section 115BAC(5)(i) has been exercised in Form 10-IE for any earlier previous year/ years? If yes, previous year in which option was exercised and Date on which option exercised

Details required in Form 10-IF

• Name of the Co-Operative Society
• Whether Co-Operative Society is Resident or not?
• Registered Address
• PAN
• Date of Incorporation
• Nature of Activities
• Whether the Co-Operative Society has any Unit in International Financial Services Centre (IFSC), as referred to in section 80LA(1A), and if the answer is affirmative then provide details of unit such as name, address and nature of activities undertaken

We hope the article has clarified all the doubts regarding compliance requirements towards Section 115BAC and Section 115BAD. Hence, please don’t forget to comply with the same otherwise, you will not be allowed to take the benefit of new tax regime and your income will be tax according to the old tax slab only.

(Article is co-Authored by CA Prapti Raut)