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Precautions to be taken to shift from new scheme to old scheme while filing Income tax return

As we know that new tax regime is set as a “default tax regime” through a recent amendment, so we are supposed to choose which scheme is beneficial for us while filing our Income tax return, we must note that filing Form 10-IEA is important for individuals as well as Hindu Undivided Families who are willing to continue using the old tax regime in the current financial year 2023-24 or assessment year 2024-25. This form was introduced by the Central Board of Direct Taxes to allow the taxpayers to opt for old tax regime even after the new tax regime is made as default tax regime.

Let’s Understand, what is Form 10-IEA?

As I discussed above, taxpayers who prefer the old tax regime are required to submit Form 10-IEA to indicate their choice. This form helps assessee as well as department to maintain correct tax records and ensure transparency in the selection of tax regime.

Which regime to choose? This I already discussed in the article, link: https://taxguru.in/income-tax/tds-deduction-tax-regime-budget-2023-impact.html

Is it mandatory?

The answer to this is law is not yet clear, we will discuss this in detail at the later part of this article with a case law.

What is the purpose of Form 10-IEA?

If I am earning income from my profession or business, I would be required to submit Form 10-IEA before the deadline for filing your income tax return which is usually 31st of July 2024. This form will allow me to switch from the new tax regime to the old one. This form requires the details such as your PAN number, assessment year, name, and current status to accurately identify and categorize taxpayer information.

What is Assessment year?

The assessment year is year which comes after the Financial Year, that means it is the time in which the income earned during Financial Year is assessed and is liable to be taxed. Both Financial Year and Assessment Year start on 1st of April and end on 31st of March. like, for Financial Year 2023-24, the assessment year is 2024-25

Precautions to be taken to shift from new scheme to old scheme while filing Income tax return

What are the changes in Form 10-IEA?

Before Financial year 2023-24, the taxpayers used Form 10-IE to choose the new tax regime over old one. Now, with the new tax regime as the default, Form 10-IEA is used to opt for the old tax regime. This amendment simplifies the process for individuals without professional or business income.

When to Submit Form 10-IEA?

Assessee is required to submit Form 10-IEA online before the deadline for filing your income tax return that means before 31st of July 2024. Timely submission of the form ensures the proper compliance with the income tax act and smooth processing of the income tax return by the department.

After submitting the form, you will receive an acknowledgment number, which is important for tracking the form’s status and for any future reference as well as when filing your return, as it will be required to be mentioned on ITR.

How to verify Form 10-IEA?

Verification is crucial and can be done using an electronic verification code received on aadhar linked mobile number or through a digital signature certificate. This step is important because it ensures that the information which is provided is verified and prevents any fraudulent activities.

How to Find Form 10-IEA?

First of all, you are required to go to the income tax e-filing portal and log in using your credentials, then on the dashboard, click ‘e-File’ > ‘Income tax forms’ > ‘File Income Tax Forms’, Scroll down to find Form 10-IEA or use the search box. Then click on ‘File Now’ for proceeding further.

Then you are required to choose the assessment year for which you are filing the return like if you are filing ITR for income earned in FY 2023-24, select AY 2024-25, after that review the required documents and click ‘Let’s Get Started’.

If you have income from a business or profession, select “Yes”. Choose the applicable due date for filing your return and click continue, if you don’t have such income then you are not required to file this form, directly you can select in your ITR form, else click ‘Yes’ to confirm you are opting for the old tax regime.

Now let’s discuss how to fill out the Form?

Form 10-IEA have three sections:

Basic Information in which your basic information will be pre-filled. If opting out for the first time, the option will be auto-selected. Save the information.

Additional Information in which you are required to fill in details related to IFSC unit (if applicable), and then save the information.

Third section is about the Declaration and Verification in which you are required to check the self-declaration boxes, agree to the terms, and verify that all details are correct. Click ‘Preview’ to review the form.

How to verify and Submit? 

You may e-verify through Aadhaar OTP, Digital Signature Certificate, or Electronic Verification Code and then after verification, click ‘Yes’ to submit the form. A success message will display with a Transaction ID and an Acknowledgement Receipt Number, you may download the form for your future reference.

What things to keep in mind while filing the form?

We must ensure that Form 10-IEA is submitted before or during the filing of the ITR to opt for the old tax regime, Providing the accurate dates and information to avoid issues at the later stage, also we must keep in mind that only individuals not earning income through business are allowed to change regimes every year, so we must be careful.

Filling and submitting Form 10-IEA correctly ensures you can continue using the old tax regime and comply with tax regulations seamlessly, now as I discussed earlier, let’s go through an amazing case law of Pune Income Tax Appellate Tribunal regarding same issue.

Is late Filing of Form 10IE a ground for Denial of New Tax Regime Benefits? 

On June 10, 2024, the Pune Income Tax Appellate Tribunal (ITAT) ruled in favor of Mr. Akshay Devendra Birari, granting him the benefits of the new tax regime, which had been previously denied by the Revenue.

Mr. Birari, who earns income from salary and trading in Futures and Options, filed his income tax return for the 2023-24 assessment year under the new tax regime, declaring an income of Rs. 40.54 lakhs. Although he submitted the required Form 10IE on January 10, 2024, but it was filed after the due date which was July 31, 2023.

The ITAT noted that this delay should not disqualify him from receiving the benefits of new tax regime. The Tribunal observed that filing Form 10IE is not a strict legal requirement but rather a guideline.

Since the form was available when his return was processed, the ITAT ruled that the Centralized Processing Center should have considered it and granted the benefits. The ITAT directed the Revenue to amend their previous decision and allow Mr. Birari the benefits of the new tax regime, demonstrating a more flexible and taxpayer-friendly approach in handling procedural delays.

This ruling highlighted that while it’s important to follow guidelines provided by the Income tax department, On other hand there shall be a flexibility in the enforcement of these guidelines with due interpretation of law.

In conclusion, Form 10-IEA is a significant requirement for taxpayers who want to remain in the old tax regime as opposed to the new one which has been set as the default. This helps keep track of all tax incentives and ensures that taxation is done smoothly and accurately. The step-by-step guide is designed to facilitate filling of Form 10-IEA online and importance of submitting it on time as well as authenticating its accuracy.

Moreover, ITAT’s ruling in favour of Mr. Akshay Devendra Birari highlights flexibility when it comes to enforcing tax policies. Even though the late filing was done by ITAT through recognition that at such return processing time this form should have enabled him benefits of new tax regime. This decision illustrates a taxpayer friendly approach to ensure that procedural delays do not deny citizens their rightful dues.


Author Bio

CA Aman Rajput, Practicing Chartered Accountant Contact me at 8209604735 Email ID aman.rajput @ mail.ca.in Area of practice:- Income tax, Audit, Company/LLP Incorporation or closure, Business consultancy, cost management, Financing, Startups, MSME, Finance, Virtual CFO, GST and forensics a View Full Profile

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July 2024