Can taxpayers switch between old and new tax regimes? Check details

Ask Money Today: Can I choose the old tax regime back next year if I opt for the new tax regime this year? Are the rules the same for consultants and professionals? What other points should I keep in mind while choosing the new tax regime?

Sadhana 

Reply by Neeraj Agarwala, Partner, Nangia Andersen India

Individuals having income (other than income from business & profession), can change their option of being taxed under the old tax regime or the new tax regime every year. This option must be exercised when filing the income tax return and can be changed every year, provided the income tax return is filed within the due date.

However, for individuals with income from business and profession, the tax regime opted for in the previous tax returns also applies to the subsequent years. The tax regime can be changed only once in their lifetime by submitting an application in prescribed Form 10IE, on or before the due date of filing the income tax return under Section 139 (1) of the Act. 
 
The proposed new tax regime is a more simplified tax regime with limited deductions. Which tax regime is more beneficial, depends on deductions available in case of an individual. The new tax regime would be more beneficial for an individual earning income from salary with only deductions under section 80C of the Act. For others having eligible deductions such as interest on a home loan or HRA, the old tax regime may be more beneficial. Further, it must be noted that the regime selected by employees during declaration to the employer is not absolute and can be changed at the time of filing of the income tax return.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)

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