It’s Time to File Income Tax Return: Know All About Old and New Tax Regime and Filling of Form 10-IEA
The Government in union budget 2023 had made New Income Tax regime as a default tax regime for all the taxpayers and taxpayers who want to opt for the old tax regime will now have to specifically indicate their preference.
Income Tax forms for FY 2023-24 are now available on Income Tax portal for filling the tax return. This being the first year in which New Tax Regime will be taken as default tax regime, due to which there are certain general question which we tried to cover in this article.
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Difference Between Income Tax Rates Under Old and New Tax Regime
New Tax Regime: The new tax regime offers six tax slabs, with zero tax for income up to Rs. 3 lakh, and a tax rate rising by 5 percentage points for incremental income of Rs. 3 lakh each.
| On Income | Tax Rate |
| Up to Rs. 3,00,000 | Nil |
| From Rs. 3,00,001 to Rs. 6,00,000 | 5% |
| From Rs. 6,00,001 to Rs. 9,00,000 | 10% |
| From Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| From Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
Old Tax Regime: The income tax slabs were not tweaked for the old tax regime for FY. 2023-24 and remain as below.
| Total Income | Tax Rate |
| Up to Rs. 2,50,000 | 0% |
| Rs. 2,50,000 to Rs. 5,00,000 | 5% |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% |
| Above Rs. 10 lakh | 30% |
Difference Between Old and New Tax Regime
Apart from the tax rates, the basic difference between the both tax regimes is for claiming exemptions under various heads. Under old tax regime there is a long list of exemptions which are allowed as deduction where as under the new tax regime, taxpayers are not eligible for certain common exemptions. The list of some of the deduction allowed under Old Tax Regime and New Tax Regime is as under
| Deductions or Exemptions | Old Tax Regime | New Tax Regime |
| Standard Deductions of Rs. 50,000 for salaried employee | YES | YES |
| Employment/ Professional Tax | YES | NO |
| House Rent Allowance (HRA) | YES | NO |
| Exemptions for Free Food & Beverages through Vouchers/ Food Coupons | YES | NO |
| Deductions of Up to Rs. 1.5 lakhs u/ Chapter VIA towards investments like U/s 80C, 80CCC, 80CCD, 80DD, 80DDB, 80E, 80EE, 80EEA, 80G, etc. | YES | NO |
| Deductions U/s 80CCD(2) for Employer’s Contribution to Employee NPS Accounts | YES | YES |
| Deductions U/s 80CCD(1B) of Up to Rs. 50,000 | YES | NO |
| Medical Insurance Premium U/s 80D | YES | NO |
| Interest on Home Loan for Self-Occupied/ Vacant Property | YES | NO |
Tax Saving Illustration
Whether any person is going to save the tax or not under the new tax regime is depends upon the deductions available with him. Below is the simple example to understand which tax regime is beneficial to you and what amount of tax was saved if we opted to new tax regime.
For an example if person who is having the Gross total income of Rs. 15,00,000/- or more and having different deductions available as mentioned in below table tax saving in new regime will be as under.
| Sr. No. | Situation | Tax Saving / (Loss) under New Regime |
| 1 | Person having below deduction
· Housing Loan Interest of Rs. 2,00,000/- · 80C Investment of Rs. 1,50,000/- · NPS Contribution of Rs. 50,000/- · Mediclaim for Self of Rs. 25,000 · Mediclaim for Parents of Rs. 25,000 |
(Rs. 23,400) |
| 2 | Person having below deduction
· Housing Loan Interest of Rs. 2,00,000/- · 80C Investment of Rs. 1,50,000/- · NPS Contribution of Rs. 50,000/- |
(Rs. 7,800) |
| 3 | Person having below deduction
· Housing Loan Interest of Rs. 2,00,000/- |
Rs. 54,600 |
| 4 | Person having below deduction
· 80C Investment of Rs. 1,50,000/- |
Rs. 70,200 |
| 5 | Person with NIL Deduction | Rs. 1,17,000 |
From the above table it will clear that the new tax regime is beneficial to those taxpayers who does not have any deduction or having lower deductions available with them, for the tax payers who is having all deduction as shown in table above old tax regime is always beneficial.
Opting for the old tax regime and filling out Form 10-IEA
Earlier, till FY 2022-23 when the new tax regime was not the default tax regime, individuals had to file Form 10-IE to specify their willingness to choose the new tax regime. However, starting FY 2023-24, the new tax regime has been set as the default tax regime. This means that if the taxpayer does not specify their intent to choose the old regime, they will be automatically enrolled in the new regime.
Individuals, HUF, AOP (other than co-operative societies), BOI & Artificial Judicial Persons (AJP) having income from business or profession and who wants to go with old tax regime, need to file form 10-IEA online to indicate the preference for the old tax regime. They have to mandatorily submit Form 10-IEA before the due date prescribed for filling an Income Tax Return if they want to switch their tax regime from new to old or if they want to re-enter in the new scheme.
Whereas individuals, HUF without any professional or business income can opt out of the new tax regime directly at the time of filing tax returns. Means the person who does not have any income from business or profession can opt out of the new tax regime directly without filling any other specific form.
Whether we can switch between the old and new tax regime each year?
Only individuals who do not have any income from business or profession are allowed to discontinue any regimes each year.
Taxpayer having income from Business or profession can use Form 10 IEA to “Opt out or Re-enter” in the New Tax Regime twice in a lifetime i.e. one for opt out of new tax regime and one for re-entering in to the new tax regime. In case withdraw the option in form, you will never be eligible to exercise the option of old tax regime again except when you cease to have income from business or profession.
CONCLUSION
Both old and new tax regime have benefits as well as drawbacks. Before deciding, understand the differences between the old and new tax regimes. The previous tax structure encourages taxpayers to cultivate a habit of saving, while the new tax structure benefits employees who earn less and invest less, resulting in fewer deductions and exemptions.
The new tax system is safer and more straightforward, with fewer records and less potential for tax evasion fraud. However, due to the unique nature of individual deductions and exemptions, a thorough comparison of the two regimes is necessary to determine the best fit for each person.
Author Bio
Hi Sir, the professional who opted out from the new regime in the last assessment year (2023-24), can he submit an IT return in this AY 24-25 in the new regime