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Business Standard
30-05-2025
- Business
- Business Standard
Can you switch tax regimes? rules for salaried and business taxpayers
As Indians file their taxes, many of them are likely wondering if they should adopt the old or new regime. The first offers exemptions and deductions and the other lower tax rates but no deductions: either of them will shape your take-home income. Can you switch between the two regimes? If yes, how often? Experts say that while salaried individuals have flexibility, those with business income face tighter controls. Here's a breakdown of what the rules allow, and the pitfalls to avoid. Salaried individuals can switch regimes every year Salaried taxpayers can toggle between the old and new regimes every financial year while filing their Income Tax returns (ITR). This means you don't have to commit to one regime forever. 'A salaried individual has the flexibility to switch between the old and new tax regimes every financial year,' said Amit Bansal, partner at Singhania & Co., a legal consultancy firm. 'They can reassess their financial situation and choose a regime that offers better tax benefits.' Even if you declared a particular regime to your employer for the purpose of tax deducted at source (TDS), the choice isn't binding. 'The intimation to the employer is only for TDS purposes,' said S R Patnaik, partner (head - taxation) at Cyril Amarchand Mangaldas. 'The final regime selection must be made by the individual while filing their ITR.' Restrictions on professionals, business income If you have income from business or profession, you can switch from the new regime to the old regime only once. After that, unless your business income ceases, you cannot go back to the new regime. Income earned by professionals such as Doctors, Lawyers, Accountants, etc. is termed professional income. 'Once individuals with business or professional income opt for the new tax regime, they can return to the old regime only once,' said Bansal. 'This is to ensure consistency in tax planning and avoid regime-hopping.' To exercise this switch, the taxpayer must file Form 10-IEA before the due date of filing their ITR. Missing this deadline means being locked with the default regime. Can you change tax regime while filing ITR? Experts say salaried individuals can change regimes at the time of filing their return, even if they picked another one for employer TDS purposes. But this has practical challenges. 'If a salaried person opts for the old regime at the time of filing but hasn't submitted deduction proofs to the employer, the mismatch can trigger a notice,' said Aarti Raote, partner at Deloitte India, a professional services firm. 'Form 16 would reflect a different regime, leading to delays in assessment.' Common mistakes to watch out for Experts flagged a few frequent errors: Not comparing both regimes carefully using reliable tax calculators. Assuming the employer's regime choice is final, it's not. Failing to maintain deduction proofs when switching back to the old regime. Missing deadlines for submitting forms like 10-IEA (for business professionals). 'The most important thing is that taxpayers must choose their regime before the due date for filing the ITR,' said Patnaik. 'One frequent mistake is not estimating income and deductions accurately before choosing a regime,' said Raote Bottom line According to rules, salaried individuals can switch regimes annually, while business professionals can do so only once, and with conditions. Making the right choice requires a proper evaluation of income, deductions, and future plans like home or education loans. The tax regime you choose isn't just a checkbox, it's a financial strategy. Choose wisely, file on time, and when in doubt, consult a professional.
India.com
27-05-2025
- Business
- India.com
Good news for taxpayers as Income Tax Dept extends date for filing ITRs from July 31 to...
ITR deadline The Income Tax Department on Tuesday extended the due date to file income tax returns for FY 2024-25 (AY 2025-26) from July 31 to September 15. The Central Board of Direct Taxes (CBDT) has decided to extend the due date for filing returns 'in view of the extensive changes introduced in the notified ITRs and considering the time required for system readiness and rollout of Income Tax Return (ITR) utilities for Assessment Year (AY) 2025-26', according to an official statement. This extension is expected to mitigate the concerns raised by stakeholders and provide adequate time for compliance, thereby ensuring the integrity and accuracy of the return filing process, the statement said. The notified ITRs for AY 2025-26 have undergone structural and content revisions aimed at simplifying compliance, enhancing transparency, and enabling accurate reporting. These changes have necessitated additional time for system development, integration, and testing of the corresponding utilities. Furthermore, credits arising from TDS statements, due for filing by May 31, are expected to begin reflecting in early June, limiting the effective window for return filing in the absence of such extension, the statement said. Accordingly, to facilitate a smooth and convenient filing experience for taxpayers, it has been decided that the due date for filing of ITRs, originally due on July 31, is extended to September 15. A formal notification to this effect is being issued separately, the statement added. The CBDT has notified the income tax return forms ITR-1 and ITR-4 for the financial year 2024-25 and the assessment year 2025-26 on April 30. The returns for incomes earned during the financial year from April 1, 2024, to March 31, 2025, have to be filed using the new forms. A major change in the ITR forms this year is that ITR-1 (SAHAJ) can be filed for notifying long-term capital gains (LTCG) under section 112A. This is subject to the condition that the LTCG is not more than Rs 1.25 lakh, and the income tax assessee has no loss to carry forward or set off under the capital gains head. Earlier, ITR 1 did not have a provision to report capital gains tax. This year, taxpayers, who have long-term capital gains from the sale of listed equity shares and equity-oriented mutual funds, can use ITR-1 to file their tax returns. However, ITR-1 forms cannot be filed in cases of taxpayers who have capital gains from the sale of house property or short-term capital gains from listed equity and equity mutual funds. The notification also stipulates that in cases where income tax assesses have opted out of the new income tax regime in AY 2024–25, they must declare and opt to either continue or reverse the selection. Those who have opted out of the new income tax regime for the first time in AY 2025–26 must furnish Form 10-IEA acknowledgement details. Additionally, there must also be a clarification for the late filing of Form 10-IEA.
India Today
12-05-2025
- Business
- India Today
ITR Filing 2025: Opting for old tax regime? Here's why Form 10-IEA is a must
It's that time of the year again when taxpayers gear up to file their income tax returns. For the financial year 2024–25 (assessment year 2025–26), the Income Tax Department has already released ITR-1, ITR-3, ITR-4, and ITR-5 forms. Now, if you're planning to go with the old tax regime instead of the default new regime, there's an important step you must not miss, i.e., filing Form form is a must for certain taxpayers who wish to switch back to the old regime. Let us know more about this IS FORM 10-IEA?Form 10-IEA is a declaration form for those who do not want to follow the new tax regime. If you earn income from a business or profession, and you wish to continue with the old tax regime (which allows various deductions and exemptions), this form is essential. Individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), or Artificial Juridical Persons with such income must submit Form 10-IEA before the due date for filing their the other hand, salaried individuals or pensioners without business or professional income don't need to file this form. They can opt for the old tax regime by simply selecting the appropriate option in their ITR MUST FILE IT?advertisementTo file Form 10-IEA, taxpayers need to have business or professional income and must use ITR-3 or can simply choose the "Opting out of new regime" option while filing their ITR. The form must be submitted within the deadline set by Section 139(1).Skipping this step could mean being taxed under the new regime, even if you wanted to claim benefits allowed under the old TO FILL FORM 10-IEATo complete Form 10-IEA, you'll need to enter some essential information. This includes your full name as per PAN, and the correct assessment year (such as AY 2025–26 for income earned in FY 2024–25).It's important to state whether you're discontinuing or returning to the default tax regime, as it determines how your income will be taxed, including what exemptions and deductions you can claim. If you are switching regimes, you must also mention the date from which the new regime with business or professional income need to confirm that their earnings fall under "Profits and Gains of Business or Profession."A simple yes/no confirmation is needed for owning any units in an International Financial Service Centre (IFSC), and if the answer is yes, further details must be given. Other important information includes the taxpayer's address, date of birth, PAN, type of business or profession, any earlier Form 10-IE filed, and a declaration to complete the process.
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Business Standard
08-05-2025
- Business
- Business Standard
ITR filing for freelancers: Key tax tips to simplify the process
As tax season approaches, India's growing freelance community are navigating a maze of rules and forms. Filing income tax returns (ITR) as a freelancer comes with its own challenges and opportunities. Experts from tax and legal firms break down what every freelancer must know. Choose the right tax regime and form 'Freelancers are taxed just like salaried individuals under the applicable income tax slabs,' said Tarun Garg, Director at Deloitte India. He advised freelancers to compare both the old and new tax regimes each year. 'If opting out of the new regime, it is mandatory to file Form 10-IEA before the ITR,' he added. On selecting the correct ITR form, Garg explained, 'Freelancers should use ITR-4 if they're under the presumptive taxation scheme [Section 44ADA], and ITR-3 if they have complex income profiles like multiple house properties or capital gains.' Ritika Nayyar, Partner at Singhania & Co., echoed this, adding, 'Incorrect form selection is one of the most common mistakes freelancers make.' 'Income from freelance work must be reported under the 'Profits and Gains from Business or Profession' head,' said Garg. He recommended tracking TDS via Form 26AS and collecting Form 16A from clients. Freelancers must also pay advance tax if total liability exceeds ~10,000. Nayyar emphasised the importance of maintaining clean financial records. 'One must keep separate accounts for business and personal expenses and track all sources of income accurately,' he said. Eligible deductions freelancers can claim Freelancers can reduce taxable income by claiming a range of business-related expenses. 'These include rent, electricity, mobile and internet bills, software subscriptions, and even depreciation on laptops and cameras,' said Garg. Nayyar added, 'Proportionate expenses like home office utilities, legal fees, and business travel can be claimed if not using the presumptive scheme. Chapter VIA deductions -- like Sections 80C, 80D, and 80G-- are available in both regimes.' Should you opt for Section 44ADA? Section 44ADA offers a simpler route to tax compliance for many freelancers. 'Eligible professionals can declare 50 per cent or more of their gross receipts as taxable income,' said Kunal Savani, Partner at Cyril Amarchand Mangaldas. 'They are not required to maintain books or get audited, provided receipts stay within ~50 lakh or ~75 lakh, under certain conditions.' Nayyar added, 'It simplifies compliance and exempts eligible professionals from detailed bookkeeping. However, one cannot claim individual business expenses if using this scheme.' Avoid these common pitfalls Experts caution against frequent errors. 'Freelancers often fail to pay advance tax or maintain adequate records,' said Garg. 'This can lead to penalties under Sections 234B and 234C, or missed deductions.' 'Timely filing, correct form selection, and accurate reporting are crucial,' said Nayyar. 'Don't treat it as an afterthought, your ITR is your financial identity.'
Hans India
03-05-2025
- Business
- Hans India
CBDT issues new ITR Form 5 with key updates for assessment year 2025-26
New Delhi: The Central Board of Direct Taxes (CBDT) has notified the new Income Tax Return (ITR) Form 5 for the assessment year (AY) 2025-26 with some key updates. The Income Tax Department has introduced several changes in the new I-T return form, it said on an X post on Saturday. A major change involves a bifurcation in Schedule-Capital Gain, requiring taxpayers to separately report capital gains before and after July 23, 2024. The form also enables reporting of capital loss on share buybacks, subject to specific conditions. According to other major updates in I-T Form 5, 'Capital loss on share buyback is allowed if corresponding dividend income is shown as income from other sources (post 01.10.2024); reference of sec 44BBC (cruise biz) added; and TDS section code to be reported in Schedule-TDS'. The new ITR Form 5 includes a specific reference to Section 44BBC of the Income Tax Act. This section deals with the presumptive taxation of income for certain businesses. Also, taxpayers must now specify the Tax Deducted at Source (TDS) section code within the Schedule-TDS of the return form. This change seeks to improve transparency and ensure proper classification of TDS deductions. Earlier, CBDT notified the income tax return forms ITR-1 and ITR-4 for the financial year 2024-25 and the assessment year 2025-26. The returns for incomes earned during the financial year from April 1, 2024, to March 31, 2025, have to be filed using the new forms. A major change in the ITR forms this year is that ITR-1 (SAHAJ) can be filed for notifying long-term capital gains (LTCG) under section 112A. This is subject to the condition that the LTCG is not more than Rs 1.25 lakh, and the income tax assessee has no loss to carry forward or set off under the capital gains head. The notification also stipulates that in cases where income tax assesses have opted out of the new income tax regime in AY 2024–25, they must declare and opt to either continue or reverse the selection. Those who have opted out of the new income tax regime for the first time in AY 2025–26 must furnish Form 10-IEA acknowledgement details. Additionally, there must also be a clarification for the late filing of Form 10-IEA.
