Old tax regime Tax saving facilities are available in. According to several sections of income tax, tax exemption is given on the basis of investment made in FD, mutual funds, insurance etc. At the same time, there is no tax exemption on investment in New Tax Regime. There is no tax on income up to 7 lakh in the new tax system. If you are not able to invest to get tax exemption this year and want to switch to the new tax regime from the old tax regime, then what will you have to do for this? Let’s know.
How many times can you change tax regime
Switching between the old system and the new system is quite easy for individuals. If you are a salaried taxpayer, then you can change the tax regime every financial year, while a business ie self-employed person can change it only once in a lifetime. Section 115BAC of the Income Tax Act, 1961 belongs to the new tax system, which allows individuals to choose their favorite tax system in each financial year, provided that they do not have commercial income. While filing their income tax returns, individuals have the option to choose the tax system under which they want to assess their income for that particular financial year. The salaried individuals and business professionals can take decisions between the annual and new tax arrangements. On the other hand, individuals who do not fall into these categories are limited to switching between old and new arrangements only once in their lifetime. Salary persons have the facility to switch between new and old tax arrangements every year, allowing them to align their tax strategy with their financial position.
Get out of the new tax system
Individuals who want to “get out of” from the new tax system for the financial year 2024-25, they have to fill a separate form along with choosing the ‘Old System’ option on their tax return form. Failure to do so can be processed under the new system. You can easily choose at the time of paying income tax.
Form 10-EE
Individuals who earn income from a business or profession are allowed to change the tax system only once. If a self-employed taxpayer wants to adopt a new tax system, he can return to the old system only once in his lifetime. To make changes between tax arrangements, these taxpayers have to submit Form 10-EE with their Income Tax Return (ITR). They will not be able to return to the old system for that particular year if they do not submit Form 10-EE till the deadline for filing the original ITR. Before filing income tax returns, Form 10-EE has to be submitted. On depositing, acknowledgment number of 15 digits will be provided.
Who is beneficial to choose
If you have invested to save tax, the old tax system will be more beneficial. At the same time, the new system is a simple tax structure, but it requires careful financial planning, as tax is not available on saving investment.
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