ITR Filing for FY2023-24: Eligibility and Procedure for switching between Old and New Tax Regimes

financialexpress.com:

Question: Since the concessional tax regime u/s 115BAC of the I-T Act has now been made the default tax regime for individual taxpayers, kindly guide us on switching between the tax regimes.

Answer given by Dr. Suresh Surana, Practicing Chartered Accountant: TheFinance Act 2023 introduced various changes in the concessional tax regime u/s 115BAC of the Income Tax Act, 1961 (hereinafter referred to as ‘I-T Act’), some of them being enhancement of basic exemption limit to Rs 3 lakh, Rebate of 100% of the amount of income-tax payable on a total income not exceeding Rs 7 lakh, introduction of standard deduction to salaried taxpayer of Rs 50,000 and deduction from income in the nature of family pension.

Additionally, the new tax regime was made as the “default tax regime” with effect from the Financial Year 2023-24 (i.e. Assessment Year 2024-25). Thus, if a taxpayer fails to opt for the old regime, his/her tax liability in respect of the total income shall be computed in accordance with section 115BAC(1A), without allowing for any exemption or deduction. It is pertinent to note that the benefit of standard deduction of Rs 50,000 would now be allowed under the concessional tax regime.

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Taxpayers would have an option of choosing between the old and the new tax regime on a year-on-year basis. However, it is pertinent to note that a person deriving income from business or profession who has exercised the option of opting out of the prevalent new tax regime u/s 115BAC could exercise the option of opting back to the said new tax regime only once.

Further, in order to give effect to the aforementioned amendments, the CBDT via Notification No. 43/2023 dated 21st June 2023