Now, the individual taxpayers have a choice to either opt for the new tax regime or the old tax regime.

A new tax regime under section 115BAC is available to Individuals and HUF to pay income tax at lower slab rates when compared to normal slab rates. The concessional tax rate is available subject to certain stipulations that the assessee will not be able to claim deductions and exemptions which is prescribed under the act. It may be noted that 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. The provision for opting for a new tax regime is contained in section 115BAC. Let us know more about it: The sub-section (5) of Section 115BAC of the Income Tax Act: (5) Nothing contained in this section shall apply unless the 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. Pursuant to the above, Rule 21AG of the Income Tax Rules specifies the manner in which the option to opt payment of tax under the new regime can be exercised/withdrawn under Section 115BAC of the Income Tax Act. Rule 21AC provides for filing of Form NO. 10IE,

  • After reading all the related provisions, one can conclude that Form 10IE is to be filed for exercising the option to pay tax under the new regime ONLY by persons having income from business/profession. The option has to be exercised 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.”
  • In short, a person not having income from business/profession opting to pay tax under the new tax regime can directly exercise the option under section 115BAC in the Income Tax return ITR 1 or ITR 2 and is not required to file Form 10IE.
  • The Functionality is automatically enabled & the assessee who is having business income only will be able to File FORM -10IE.