Regular post-retirement income | Additional tax benefit on investments up to ₹50,000 u/s 80CCD (1B) - EEE Category | Regulated by PFRDA (Pension fund regulator under Ministry of Finance, Govt. of India)

The Indian finance ministry introduced the new tax regime for income taxpayers in the Finance Act, 2020. To opt for the new tax regime, you will have to give a declaration choosing your option. Form 10IE is a declaration made by income tax return filers for choosing this new tax regime. In this article, we will learn more about Form 10IE and other important information, such as how to switch between the two tax regimes.

What Is The Existing Or Old Tax Regime?

By existing or old regime, it means that the income tax is calculated on the basis of the old tax slabs.

 

In this old regime, the various income levels are taxed based on the income category they come under after taking into account all the deductibles which are under Chapter VIA (deductibles under Section 80D, 80C, etc.) and other benefits like LTA, HRA and many others as per the IT Act 1961.

 

The old regime had three tax slabs-

 

  • If you earn between Rs.2.5 lakhs to Rs.5 lakhs, you will come under the 5% tax bracket. 

  • If you earn between Rs.5 lakhs to Rs.10 lakhs, you will come under the 20% tax bracket. 

  • If you earn between above Rs.10 lakhs, you will come under the 30% tax bracket. 

An education cess of 4% is applied to the tax that is calculated above.

What Is The New Tax Regime for FY 2022-23?

The new tax regime has lower tax rates but one thing to keep in mind is that most of the tax benefits and deductibles from the existing/old tax regime are not applicable.

 

The major difference between the old tax regime and the new tax regime is that the new regime has lower tax rates and increased tax slabs.

 

You have to decide between the new regime and the existing/old tax regime. This has to be done before you file the returns for income tax for the financial year.

Income Slab

Income Tax Rate

Up to Rs.2.50 lakhs

NIL

2.50 lakhs - 5 lakhs

5% of the amount exceeding 2.5 lakhs

5 lakhs - 7.5 lakhs

10% of the amount exceeding 5 lakhs + Rs.12,500

7.5 lakhs - 10 lakhs

15% of the amount exceeding 7.5 lakhs + Rs.37,500

10 lakhs - 12.5 lakhs

20% of the amount exceeding 10 lakhs + Rs.75,000

12.5 lakhs - 15 lakhs

25% of the amount exceeding 12.5 lakhs + Rs.1,25,000

15 lakhs and above

30% of the amount exceeding 15 lakhs + Rs.1,87,500

An education cess of 4% is applied to the tax that is calculated above.

How To Opt For The New Tax Regime?

If you want to opt for the new tax regime, you need to submit your choice of opting for the new tax regime in Form 10IE to the Department of Income Tax prior to filing your income taxes.

Applicability Of The New Tax Regime

The new tax regime’s Form 10IE applicability is from FY 2020-2021, i.e., AY 2021-2022. The option of the old tax regime and new tax regime is available to Hindu Undivided family (HUF) and individuals, which can be availed by filing Form 10IE.

How To Give Declarations Of Choice Between Both The Regimes?

If you are a salaried person, your employer may ask you for a declaration to choose between the new and old tax regime.

  • Scenario 1. Employer has asked you for a declaration to choose between the two regimes

In this case, you have to choose your option before the Form 10IE due date as mentioned by the employer. According to the regime that is chosen by you, your employer will calculate the liability of TDS. If you fail to do so, the organisation will calculate the TDS liability on the basis of the old/existing tax regime.

  • Scenario 2. Employer has not asked you for a declaration to choose between the two regimes

In this case, the organisation will calculate the TDS liability on the basis of the old tax regime. The organisation will also mention the regime that was chosen for deduction of TDS in the Form 16 given to the employee.

 

In both the situations, however, the employee can switch to the regime that they want irrespective of the one declared to the organisation at the time of filing income tax return. 

How to Communicate to the IT Department About the New Tax Regime?

Form 10IE is released by the Central Board of Direct Taxes. Any HUF or individual who wants to pay their income tax as per the new regime can inform the same to the IT Department by filing the Form 10IE. You can also fill out the form if you want to opt out of the new regime. 

Time Limit for Filing Form 10IE

Individuals having business income can submit Form 10IE prior to the ITR filing deadline, which is the 31st of July or some other date (if the government decides to extends its due date)

 

Individuals with salary income can complete Form 10IE prior to or simultaneously with ITR filing.

Contents of Form 10IE

Basic information needed to submit Form 10IE is listed below:

 

  • Name of the HUF/individual

  • PAN number

  • Confirmation if the HUF or individual have any income 

  • Date of incorporation/Date of birth

  • Address

  • Nature of profession/ business

  • Details of the Form 10IE that was filed.

  • Confirmation in ‘no/yes’ of whether the individual has any unit in IFSC 

  • Declaration

How to Switch Between the New and Old Tax Regime?

  • Individuals who have ‘Business income’

Individuals who have income from business do not have the option to choose between the old and new regime on an annual basis. Once they decide on the new tax regime, they only have one opportunity to change to the existing regime. They won't be able to select a new tax regime in the future after they return to the previous one.

 

Therefore, individuals with income from business will have to submit Form 10IE two times—once to select the new regime and again to revert to the old regime.

  • Individuals having income ‘other than business income’

The new and old tax regimes are available to anyone with a salary and no other source of income.

 

In order to choose the new tax system, the salaried individuals will therefore need to submit Form 10IE annually.

E-Filing of Form 10IE

  • The individual should electronically submit Form 10IE.

  • To choose the new tax system for FY 2020–2021 and later, taxpayers must submit the form through the income tax department portal.

  • Either a digital signature or an electronic verification code will be used to submit the form (EVC). The process for filling out and verification has not yet been announced by the income tax department.

How to Download Form 10IE Copy?

By visiting the Income Tax Department of India's official website on www.incometaxindia.gov.in and selecting the "Forms'' tab, you can download Form 10IE. Select Form 10IE by clicking the appropriate link.

 

You should thoroughly research both the old and new tax regimes before filling out Form 10IE. You can base your decision on your financial objectives and investments by understanding both tax regimes. Before submitting the declaration using Form 10IE, it's crucial to thoroughly read the information above to understand how to file Form 10IE and other basic information..

FAQs

  • ✔️If I choose the old regime for deduction of TDS by my organisation, can I file my returns under the new regime?

    All of the regimes have an annual opt-out period, and only individuals who get a salary are eligible. Additionally, the individual is permitted to use a different tax regime than the one they used to deduct TDS from payroll; in other words, the employee may use a different tax regime than the one they previously selected when submitting an ITR.

  • ✔️What happens if I fail to submit Form 10IE?

    The benefit of the new tax regime's reduced tax rates will not be available to taxpayers who forget to fill out Form 10IE before or at the time they file their ITR. The income tax division will compute taxes under the old/existing tax system.

  • ✔️Which of the two tax regimes, the old or the new, is advantageous?

    No single regime is beneficial for all. Both regimes have their advantages and drawbacks.

    As a result, it is advised to do a comparison and study of both regimes before selecting the most advantageous one since it may differ from individual to individual.

  • ✔️Who is required to sign Form 10-IE?

    Only the individual/Karta of the HUF/Authorised Representative may sign this form.

  • ✔️How do I download Form 10IE's paper copy?

    Even if the Form 10IE is available online, you can refer to the Department's announced Form 10IE for a range of situations where it may not be possible to complete the online form.