As the financial year rolls on, many salaried individuals in India find themselves facing a crucial decision: opting for the old tax regime or embracing the new. But is there a strict deadline looming over this choice?
Technically, no. There isn’t a standalone deadline to select a specific tax regime for the fiscal year 2023-2024 (AY 2024-2025). However, the clock starts ticking when it comes to filing your Income Tax Return (ITR).
Your window of opportunity opens alongside ITR filing. Typically due on July 31st (with an extension until October 31st for audited accounts), this deadline effectively doubles as the cutoff for choosing your tax regime as a salaried individual.
Here’s the catch: if you don’t actively make a choice, your employer will default to the new tax regime, meaning your taxes will be deducted accordingly.
Ritika Nayyar, Partner at Singhania & Co., emphasises, ‘It is pertinent to note that the default regime shall be the new tax regime.’ This underscores the importance of timely action, especially if you wish to retain the deductions and exemptions of the old regime.
For those with business or professional income, additional steps are necessary. Opting for the old tax regime requires submitting Form 10-IEA before the ITR deadline, typically July 31st.
Amay Jain, Senior Associate at Victoriam Legalis, clarifies, ‘From the new Financial Year, the new income tax regime has been set as the default option.’ This signals a shift in the tax landscape, requiring proactive measures from taxpayers.
Understanding the disparities between the old and new regimes is crucial. While the new regime offers revised slabs and lower rates, it scraps many exemptions and deductions. Conversely, the old regime maintains a progressive tax structure with a plethora of tax-saving avenues.
The choice boils down to individual circumstances, with potential savings and implications to consider. However, filing your ITR on time is paramount. Missing the deadline means automatic enrollment in the new regime, forfeiting the benefits of the old regime for that fiscal year.
In essence, the clock is ticking, urging taxpayers to make an informed decision before the filing deadline arrives. So, heed the experts’ advice, mark your calendars, and ensure your taxes align with your financial goals. After all, timely action could translate into substantial savings come tax season.
