Tax Filing Time? Don’t Forget to Choose Your Regime Carefully

The new tax regime, which was introduced in the Union Budget 2020, and became applicable from financial year 2020-21, is now the default tax regime, starting from financial year 2023-24. 

Initially, the new tax regime did not find much favour with taxpayers as it did not allow for claiming benefits on exemptions and deductions allowed under the old regime. 

However, taxpayers still have the option to file their taxes under the old tax regime.

One can also choose to change the tax regime when filing their taxes. So if a salaried taxpayer had chosen the old regime during the year, he/she can shift to the new regime. Likewise, if one had chosen the new tax regime during the year, he or she can go back to the old tax regime. 

It is also noteworthy to remember that the tax regime one chooses during a year does not automatically get carried over to the next year. One has to make an active choice while filing one’s tax returns. If not, the new tax regime will be chosen as the default. 

How To Choose The Tax Regime 

When filing your income tax return, you will be asked if you want to opt out of the new tax regime. 

If you answer ‘yes’, it will imply that you want to go back to the old tax regime. If you choose ‘no’, it means that you want to stay in the new tax regime, and your return will be filed under the new tax regime. 

You are allowed to switch between the new and the old tax regime, only when you file your ITR or before that. If you do make a change or miss your deadline and file a belated return, your tax return will be filed under the new tax regime by default. You cannot make any changes anymore. 

If you are a salaried employee, you need to file your taxes by July 31. However, the earlier you file your returns, the earlier you will get your refunds. 

Click here to know about some key income tax changes from April 1.