Meet Supriya. She is a young entrepreneur who recently started her own textile business. She struggled day and night finding to find the right suppliers for raw materials, to employ workers and market her brand. After all these efforts and months of hardship, coupled with her ambitions, she was finally able to make her business profitable. Time flew by and the time to declare her income was close.
Understanding taxation may seem like a huge task. You try to keep up with the new norms and policies, but there is always more to learn. Right from calculating the tax you are liable to pay, to the right way of filing your taxes. You invest in multiple tax-saving plans like ELSS and life insurance schemes, yet you look for more ways to save money.
What more can be done you ask? Did you know that you can select a tax regime to meet your financial needs? It is essential to consider the tax bracket and the regime you pay your taxes under. For this, Form 10IE plays a very crucial role. It is the form that lets you choose the tax regime that works best for you—confused about how to begin? Supriya is wondering the same. She started her first business in June of last year and is trying to understand the different tax regimes and the process for filling out Form 10IE.
No need to worry! Take it one step at a time. Let’s begin with understanding the different tax regimes available to us!
The taxes you are liable to pay depend on your income and investments. This process was managed through only one regime, i.e. the old tax regime, until financial year 2020-2021. As per the Finance Act 2020, a new tax regime was introduced where the taxes levied were lowered significantly.
Upon learning about the difference between the two, Supriya wondered why everyone wouldn’t just switch to the new regime. The lower rates are surely appealing, so why would she pay extra for her taxes? This brings us to a key difference between the two. The old regime allows certain tax benefits and deductions on investments like medical insurance, PPF, ELSS and others. This option remains unavailable to people who apply for the new tax regime.
Therefore, the financial strategy of an individual determines the regime they will choose. Now that the difference between the two is clear, Supriya has made her decision. She has chosen to go forward and select the new regime. However, she must now notify the Income Tax Department of her selection. For this, she needs to fill out Form 10IE.
Form 10IE is a declaration made by an individual confirming the tax structure they wish to pay their taxes under. But what if you fail to submit the form? Salaried individuals are required to fill out the form every year to opt for the new tax regime under Section 115BAC of Income Tax Act of 1961. On the other hand, individuals with business income must fill out the form just once in order to change the regime. It is essential to submit the form before filing your Income Tax Return (ITR). If you fail to submit the form on time, you are not eligible to benefit from the low tax rates of the new regime. You will be required to submit the following information and documents when submitting the form:
After understanding what Form 10IE is all about, Supriya is ready to make the most of the new tax regime. She is set to fill out the form and save on her taxes. Once again, the difficulty that arises before her is the process. Well then let’s help Supriya file Form 10IE.
On completion, you will be given an acknowledgement number which you will be required to provide during your ITR filing.
Like Suprita, we hope you too, have understood the importance and benefits of filing Form 10IE. Save up by taking into account your expenses and the right tax regime. If your financial strategy can benefit from the new regime, follow the aforementioned easy tips and tricks to save money on your taxes. Fill out your Form 10IE on time and enjoy the advantages of reduced tax rates.
If tax-saving instruments is your approach to lowering your payable tax amount, find tax-saving fixed deposits and more on Bajaj Markets! From the various options available here, get an investment plan that offers great returns while saving on taxes. What are you waiting for? Go on, make your investments now!