Filing income tax can be a daunting task, especially with the introduction of the new tax regime. Understanding the differences between the old and new regimes is crucial for effective tax planning. This detailed guide aims to help individual taxpayers and business owners navigate the tax filing process for FY 2023-24 (AY 2024-25).
Two Tax Regimes: New Regime u/s 115BAC (Default) and Old Regime
The government offers taxpayers the choice between two tax regimes: the new regime under Section 115BAC and the old regime. Each has its own set of rules and benefits.
New Regime
The new tax regime, which is the default option, simplifies the tax calculation process by removing most deductions and exemptions.
| Aspect | Details |
|---|---|
| Basic Exemption Limit | ₹3,00,000 |
| Tax Rebates u/s 87A | ₹25,000 (subject to total income of ₹7,00,000) |
| Savings Bank Interest | Fully taxable, no exemption up to ₹10,000 |
| Beneficial If | No deductions or only deduction u/s 80C |
| Standard Deduction (Salary) | ₹50,000 |
Old Regime
The old tax regime allows taxpayers to claim various deductions and exemptions, making it beneficial for those with multiple investments and expenses.
| Aspect | Details |
|---|---|
| Basic Exemption Limit | ₹2,50,000 (₹3,00,000 for senior citizens and ₹5,00,000 for super senior citizens) |
| Tax Rebates u/s 87A | ₹12,500 (subject to total income of ₹5,00,000) |
| Savings Bank Interest | Exempt up to ₹10,000 |
| Beneficial If | Deductions u/s 80C, 80D, and 24 (Home Loan Interest) |
Late Fee for Filing ITR
Filing your Income Tax Return (ITR) after the due date can result in late fees. It’s important to understand these fees to avoid unnecessary penalties.
| Gross Total Income (GTI) | Late Fee if ITR Filed after Due Date u/s 139(1) |
|---|---|
| Up to ₹2,50,000 | No late fee |
| Above ₹2,50,000 | ₹1,000 |
| Above ₹5,00,000 | ₹5,000 |
Note: Losses cannot be carried forward if ITR is filed after the due date u/s 139(1).
Selection of Regime
Choosing the right tax regime is crucial and depends on your individual financial situation.
- ITR 1 and ITR 2 Filers: Can select any regime while filing ITR u/s 139(1).
- ITR 3 and ITR 4 Filers: Must file Form 10IEA on or before the due date u/s 139(1) to opt for the old regime or to opt out from the old regime.
Note: The option to choose the old regime can only be exercised once per financial year.
Conclusion
For FY 2023-24, the majority of individuals are likely to file their ITR under the new tax regime, as it is generally more beneficial for those with no deductions or only deductions u/s 80C. However, it is essential to evaluate both regimes carefully to determine which one suits your financial situation best.
By providing structured information, examples, and clear tables, this blog post aims to make the tax filing process more comprehensible and less stressful for individual taxpayers and business owners. If you have any further questions or need personalized assistance, feel free to reach out to our experts at Efiletax.