No Requirement To File Form 10-IE For Persons Not Having Business/Profession Income

Section 115BAC- NEW TAX REGIME (applicable from AY 21-22)

As all of you are aware, the Budget 2020 introduced a new tax regime under section 115BAC to Individuals and HUF to pay income tax at lower slab rates when compared to normal slab rates (with certain terms & conditions which is precisely non-allowability of various deductions and exemptions). Section 115BAC states that a person opting to pay tax under the new regime has to furnish Form 10-IE to the Income Tax department before filing the Income Tax Return for the relevant Assessment Year.

NO NEED TO FILE FORM 10IE FOR PERSONS NOT HAVING BUSINESS/PROFESSION INCOME 

Let us understand from the provisions of Section 115BAC the requirement of filing Form 10-IE.

The sub-section (5) of Section 115BAC of the Income Tax Act reads as under:

(5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner* by the person,—

(i) having income from business or profession, on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2021, and such option once exercised shall apply to subsequent assessment years;

 (ii) having income other than the income referred to in clause (i), along with the return of income to be furnished under sub-section (1) of section 139 for a previous year relevant to the assessment year.

*Rule 21AG of the Income Tax Rules specifies the manner in which the option to opt payment of tax under new regime can be exercised/withdrawn under Section 115BAC of the Income Tax Act.

What is FORM 10-IE?

No Requirement To File Form 10-Ie For Persons Not Having Business/Profession Income

Let us read the above mentioned point with clause(i) of sub-section (5) of 115BAC of the Act:

“Therefore, this means Form 10-IE is to be filed for exercising option to pay tax under new regime ONLY by persons having income from business/profession on or before the due date of filing income tax return specified u/s 139(1) for any previous year (beginning from AY 21-22) and such option exercised shall apply to all subsequent assessment years.”

Therefore, a person not having income from business/profession opting to pay tax under new tax regime can directly exercise option under section 115BAC in the Income Tax return ITR 1 or ITR 2 and is not required to file Form 10IE, and this is duly updated in FORM 10-IE in new income tax portal. The functionality is automatically enabled which means the assessee who is having business income only will be able to File FORM -10IE.

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33 Comments

  1. KRISHNA says:

    Assessee being a partner in partnership firm has income from partnership firm only. Hence, ITR-3 is required to be filed. Now assessee wants to opt for New Tax Regime. Whether 10-IE is required to be filed? Under Income Tax Return the nature of business code is 00001- Share of Income from firm only. However, in Form 10-IE this code is not available? Whether Form-10 IE is applicable to this assessee is or not?

    1. SALONI MEHTA says:

      If the individual as a partner has a profit sharing from a firm though it is exempt in his hands will be shown under the head “Profits and gains from Business/Profession” and therefore the assessee has income from business/profession despite it is exempt it is still an income which is not taxable in his hands as the same is taxable in the hands of firm.
      Therefore, the conclusion is whether the income is exempt or there is loss from business, the assessee is doing business and he has to file Form 10-IE.
      As far as the business code is concerned, as there is no specific code in Form 10-IE for income from partnership firm, the suitable code from the list would be the code of the business/profession the partnership firm is doing. I have already responded to a similar query raised by another person in the comments section.Kindly go through the same for your clarity.

  2. Akshay says:

    I am a salaried individual, and want to opt for the new Regime for AY 2021-22.
    I have an amount of Rs. -129 (losses) under the PGBP head from 1 day of intra-day stock trading. Do I need to fill form 10-IE?

    1. SALONI MEHTA says:

      Yes, you need to file Form 10-IE as you have income from the head business/profession irrespective of loss/profit from business you are doing business and it doesn’t matter whether you have loss or profit from business as it it natural for any business concern to earn profits or incurr losses. Any item which comes under the head “Business/profession” for an assessee and opting to pay tax under the new regime (irrespective of loss/gains) shall have to file Form -10IE for exercising option of payment of tax under new regime.

  3. Vivek Yadav says:

    (5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner62 by the person,—

    (i) having income from business or profession, on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2021, and such option once exercised shall apply to subsequent assessment years;

    (ii) having income other than the income referred to in clause (i), alongwith the return of income to be furnished under sub-section (1) of section 139 for a previous year relevant to the assessment year:

    As per my understanding clause(i) i applicable for persons having income from PGBP while clause(II) is also applicable for persons having other than as per clause(i) means all other types of income.

    so this section is applicable for all assessee

    but in this article you reached on conclusion that this is applicable for person having income from PGBP without any clarification.
    How?

    1. SALONI MEHTA says:

      Section 115BAC is applicable for any individual/HUF irrespective of any source of income.The only thing I have mentioned in article is that to exercise option under sec 115BAC filing of form 10-IE is required only for business / profession assessees whereas persons having income from other than business/profession can exercise this option directly while filing Income Tax return. Form 10-IE is required only for exercise / withdrawal of option under clause (i) of sub-section (5) of section 115BAC , if you see the description of Form -10IE you will be able to see it. I understand it is not clarified by govt but the form 10-IE is very much clear and practically while filing form 10-IE in new income tax portal it is clearly stated only those who are having business/profession income are required to file Form 10- IE
      Check this link for your reference- https://www.incometaxindia.gov.in/Forms/Income-Tax%20Rules/103520000000077909.pdf

      1. Nil Mishra Mishra says:

        (ii) Whether the individual/ HUF* has any income under
        the head profit or gains from business or profession
        : Yes/ No
        IF SO, WHY THIS CLAUSE IS IN THE FORM

        1. SALONI MEHTA says:

          Dear Sir, firstly this form was designed for all assessees.Later, this form was enabled only for business assessees.I have clearly mentioned in the article that whether assessee has income from business/profession is automatically enabled to yes in the form, you will understand this only while filing the form 10-Ie practically.You dont have the option to select No. Kindly see this Form-10IE online on new income tax portal for your thorough understanding.

  4. Nishant K says:

    Hi, I am NRI and have only 1) rental property income, 2) Income from other sources (bank interest income) and 3) Income from capital gains thru selling of Mutual Funds. I DONT have any business income.
    I am filling ITR3 but incometax portal is not allowing me to upload return with “validation error” that Date of filing of Form 10IE and acknowledgement number is mandatory. I am unable to fill 10IE as I don’t have business income. What shall I do? Please help.

    1. SALONI MEHTA says:

      ITR-3 is for individuals having income from business/profession. You are filing the wrong ITR, in your case ITR-2 shall be applicable as it is for persons having income from other than business/profession.I hope this gets clarified.

  5. HARSHIT says:

    WEATHER PERSON HAVING INCOME FROM CAPITAL GAIN AND OTHER SOURCE ONLY CAN CANGE TAX SCHEME EVERY YEAR LIKE SALARIER PERSON??
    PLS. CLARIFY
    THANK YOU

    1. SALONI MEHTA says:

      As mentioned in the article, persons having income from business/profession are required to file Form 10-IE to exercise payment of tax under new regime and they have the option to withdraw from new regime only ONCE in previous year other than the previous year relevant to the AY in which it was exercised, once withdrawn new regime can never be exercised.
      Unlike business/profession income assessees, assessees having income other than business/profession (i.e, CG/SALARY/IFOS/HP) have the option to exercise payment of tax under new regime every year on/before the due date u/s. 139(1) of the Act and they are not required to file Form 10-IE.

  6. VIRAG PATWA says:

    If i have filed an itr under old regime, can i revise it with filing form 10IE under new regime?
    And what if the itr filed under old regime contains only other source income… Pls guide.

    1. SALONI MEHTA says:

      As per Section 115BAC, an eligible assessee shall opt for the new regime while filing his return of income on/before the due date specified u/s.139(1) of the Act and not 139(4)/139(5). Therefore, it can be inferred that benefit for opting new tax regime is restricted only while filing original return on/before the due date u/s.139(1) of the Act. In case of revised return option to opt for new tax regime can be exercised only when such option has been exercised while filing original return u/s. 139(1) of the Act. As in your case, new tax regime was not exercised while filing original return the same cannot be exercised by filing a revised return.

    1. SALONI MEHTA says:

      I do understand it has not been explicitly stated by govt, but to be clear if you check Form 10-IE description it is clearly stated it is for persons who are willing to exercise option under clause (i) of subsection (5) of Section 115BAC and not clause (ii), and also when you file Form 10-IE, whether person has income from business/profession is automatically enabled to yes, you cannot put No.While filing Form 10IE practically on new income tax portal it is clearly indicated that if you do not have business income no need to file Form 10-IE.
      I hope this gets clarified:)

  7. ALPESH DODHIYA says:

    Is Form 10IE required to be filed if a person is a partner in a Firm but there is no Profit/Loss sharing nor any remuneration from firm. Only a disclosure is there in Schedule IF:Information regarding partnership firms in which you are partner.

    1. SALONI MEHTA says:

      Only if you have income from business/profession for the relevant assessment year you need to File Form 10IE.
      As there is no PGBP income in your case for that year, Form 10IE is not required to be filed.

    2. SALONI MEHTA says:

      An interesting point to be observed, if the individual as a partner has a profit sharing from a firm though it is exempt in his hands will be shown under the head “Profits and gains from Business/Profession” and therefore the assessee has income from business/profession despite it is exempt it is still an income which is not taxable in his hands as the same is taxable in the hands of firm.
      Therefore, the conclusion is whether the income is exempt or there is loss from business, the assessee is doing business and he has to file Form 10-IE.
      As in your case there is no profit sharing neither any remuneration from firm, he has no income from business therefore no need to file Form 10-IE.
      I have explained both ways to make it clear.Hope this gets clarified.

        1. SALONI MEHTA says:

          As per my understanding, whatever business/profession the partnership firm is doing in which he is a partner would be the business code naturally.

    1. SALONI MEHTA says:

      There is a separate Form-10 IE which you need to file before filing ITR.
      You can find the form in e-filing tab>income tax forms>file income tax forms>Form 10-IE

    1. SALONI MEHTA says:

      You need to file Form 10IE BEFORE the due date for filing Income Tax Return, for example for non-audit cases due date is 31st Dec,2022 so you need to file this form before 31st Dec,2022.

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