Can You Change Your Tax Regime At The Last Minute Before Filing The ITR? This Is The Rule

The last date for filing Income Tax returns is July 31, which is less than a week away. The department has also made it clear that it will not make any changes to the last date for filing ITR. That means if someone fails to file their ITR by July 31, they will have to pay a penalty. There will be no concession on that. Now, those who have not been able to file their income tax returns yet and are wondering if they will be able to switch from the old tax regime to the new one at the last moment. Then they should be aware of this rule.

Individuals whose source of income is other than business and profession can change the option between the old tax system and the new tax system every year. This option must be used when filing the income tax return and can be changed every year, provided that the income tax return is filed within the due date.

These people only have 1 chance.

However, for individuals who earn income from business and profession, the tax system chosen in the previous return applies to subsequent years as well. The tax system can be changed only once in a lifetime by filing an application in the prescribed Form 10IE on or before the due date for filing the income tax return under Section 139 (1) of the Income Tax Act. To put it simply, the tax system under which you are filing your ITR can be changed only once in future years.

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The new tax system is much easier and simpler with limited exemptions. Which tax system is more beneficial depends on the deductions available in the case of a taxpayer. The new tax system will be more beneficial for taxpayers who earn money from their salary only with deduction under Section 80C of the Income Tax Act.

Why is the old tax regime better?

For other taxpayers with eligible deductions like interest on home loans or House Rent Allowance (HRA), the old tax system may prove to be more beneficial. Also, it is to be noted that the tax system chosen by employees while filing the return to the employer is not final and can be changed while filing the income tax return. Let us tell you that if you opt for the old tax regime, you can save up to Rs 12 lakh to bring your income up to tax net.