A Bengaluru taxpayer faced a ₹1.23 lakh tax demand after a consultant mistakenly filed Form 10-IEA indicating a choice of the old tax regime. The taxpayer had, in fact, opted for the new regime in the income tax return (ITR).
In a decision pronounced by the Income Tax Appellate Tribunal (ITAT) Bangalore, the tribunal accepted the regime chosen in the ITR—the new tax regime—and directed the Income Tax Department to recompute the taxpayer’s liability accordingly, removing the discrepancy created by the erroneous filing.
What this means
The new regime, introduced to offer lower tax rates for many individuals, requires taxpayers opting for it to declare the choice through Form 10IEA along with the ITR. An incorrect filing can lead to an inflated tax demand, as occurred in this case. The ITAT’s order makes clear that liability should be calculated based on the regime stated in the ITR, not the mistakenly submitted form.
Key implications
- Accurate regime selection is crucial because it determines applicable tax slabs and deductions.
- When filing errors occur, tribunals may direct recomputation under the regime declared in the ITR.
