The Central Board of Direct Taxes (CBDT), via a notification dated October 1, 2020, has clarified that individuals opting for the new tax regime for FY 2020-21 will have to do so by filling and filing a new form, called Form 10-IE. The new form i.e. Form 10-IE has been notified by the government. An individual is required to fill and submit this form at the time of filing income tax return (ITR) if he/she opts for the new tax regime for a particular financial year.
A new optional tax regime was announced by the government in the Finance Act, 2020. As per this new regime an individual has to choose either existing tax regime which offers deductions and tax-exemptions or opt for new tax regime which offers concessional tax rates but no deductions and tax-exemptions.
Under the newly inserted section 115BAC of the Income-tax Act, 1961, an individual is required to exercise the option of choosing new tax regime at the time of filing income tax return. However, it was not clear how such option has to be exercised by an individual. To resolve this issue, CBDT has notified this form.
The new tax regime is available only to individuals and Hindu Undivided Family (HUF). Remember, an individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year. Therefore, such individuals will have to exercise the option of choosing the new tax regime, if they want to, for every financial year from 2020-21 onwards. This means that a salaried individual will have to file this form for every year for which he wants to choose the new tax regime.
However, individuals having business income are not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime. Once they switch back, they will not be allowed to opt for new tax regime again.
Information required in the form
In the notified form, the individual is required to mention the following information:
a) Name of the individual/HUF
d) The financial year for which option is exercised
e) If the individual/HUF has income under business or profession
f) Date of birth
g) Nature of business/profession, (mandatory if an individual is having income from business and profession)
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