Taxpayers not opting for new I-T regime must fill Form 10-IEA

Income tax assessees will have to fill a form to continue with the old income tax regime before the last date of filing of returns. The Income Tax Department has notified the new form. The Department has also come out with new provisions for disallowance under the new regime.

The new income tax regime prescribes lower tax rates sans various exemptions. Introduced with effect from Assessment Year 2021-22, the scheme has been amended by making it a default option from Assessment Year 2024-25. However, assessees will have the option of continuing with the old scheme.

For this, a new form 10-IEA needs to be filed.

Explaining this provision, Mitesh Jain, Partner with Economic Laws Practice, said the proposed amendments are consequential to the changes introduced vide Finance Act, 2023 to the new tax regime under Section 115BAC. Additionally, individual taxpayers not having any business income can opt out of the new tax regime in the returns itself and are not required to file Form 10-IEA.

Further, “Form 10-IEA is required to be filed before the due date of filing the income-tax returns and the taxpayers (not having business income) can opt for the old tax regime only if they are filing tax returns before the due date. Accordingly, in case a taxpayer is filing belated return (and has not filed Form 10-IEA), he is mandatorily required to pay tax under new tax regime,” he said.

Sandeep Sehgal, Partner with AKM Global, feels the new form will increase the compliance burden for assessees. Even to withdraw from the regime, the said form is required to be filed. However, persons having no income from business or profession are required to opt for new/old regime only while filing the returns is a welcome move, he said..

“If the taxpayer has withdrawn from the new regime and wishes to re-enter, the taxpayer has to provide details like date of exercising the option for opting out along with the first assessment year for which the option was exercised. The details of IFSC units also have to be disclosed in the form respectively. The procedure could have been kept simple where the requirement for filing the form should have been required only in case the taxpayer is opting out or opting in,” he said.

More amendments have been made in rules such as the disallowance of the exemption in respect of meal vouchers from perquisite calculation for taxpayers opting for the new tax regime. There will be a cap of depreciation rate to 40 per cent for taxpayers opting for the new tax regime (including new manufacturing co-operative societies). Also, unabsorbed additional depreciation is to be added to the written-down value of block of assets as on April 1, 2023 for taxpayers who have not opted for the new tax regime earlier.

This means, as Jain says, taxpayers may not be able to avail benefit of adding the unabsorbed additional depreciation to the written down value of the opening block of asset if they chose to opt for old tax regime in AY2024-25 and opt for the new tax regime in any of the subsequent years.

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