Tax payers can switch between new and old tax regime as per their wish, know what are the rules?

Budget 2023: The people of the country can choose the new and the old system as per their wish, but the rules have been made separately for both.

Tax Regime

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Union Budget 2023: Finance Minister Nirmala Sitharaman (Finance Minister Nirmala Sitharaman) presenting the budget for the financial year 2023-24 (budget 2023) can make some special announcement regarding the new tax system. During the presentation of the 2020 budget, he had said that the people of the country can choose between the new and the old system as per their wish. If in any year the taxpayer chooses the new tax regime and in the next year he understands the old tax regime, then he can opt for it. But there is not only one type of taxpayer in the country. Some are salaried and some are businessmen. Different rules have been made for both.

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Rules for employed people

  1. According to the new rules, salaried taxpayers can choose from new to old and from old to new tax regime whenever they want.
  2. The rates are lower in the new tax regime, but exemptions and deductions will not be available on opting for it.
  3. According to the rules, job professionals and pensioners will be able to go from new to old and old system only when they do not have business income.

these people have no choice

  1. The income of taxpayers earning from consultancy comes under business.
  2. It does not come under the category of income from salary.
  3. People work as consultants, they are not allowed to switch from new to old and from old to new system every year.
  4. Unlike salaried taxpayers and pensioners who have income from freelance activities, they do not have the option to switch every year.

businessmen have one chance

  1. Taxpayers earning income from business will have only one chance to choose either the new or the old regime.
  2. Simply put, businessmen pay taxes under the new system this time and return to the old system next year, then they will not be able to change.
  3. If a person’s income from business stops in future, then he will have the option of choosing the new and old income tax regime every year.

keep these things in mind

  1. Many deductions are not available in the new tax regime. For example, in the new tax regime, interest on home loan does not allow deduction up to Rs 2 lakh.
  2. Certain deductions for a new employee under Chapter VI-A of the Income Tax Act, 1961 are not available in the new tax regime with the exception of 80CCD(2) (contribution by the employer to the employee’s NPS account) and 80JJAA (deduction in respect of employment) Huh.
  3. One cannot file belated tax returns under the new tax regime. If someone is filing tax return after the due date of return, then he will have to file under the old system. Similarly, even if one files a revised belated return, one cannot opt ​​for the new tax regime.
  4. Where one has business income, one has to file Form 10-IE before the due date of ITR filing to switch to the new tax regime. Such a taxpayer has filed the original return under the new tax regime, then he will also have to file a revised return under the new tax regime. This is because Form 10IE cannot be withdrawn during the year.
  5. While filing income tax return, a taxpayer earning both salary and business income should show these incomes separately as salary income under the head Salaries and business income under the head Profits and Gains of Business or Profession (PGBP). Including these two will be his total income. Now he cannot file ITR-1 which is for salaried income. He should file ITR-3 or ITR-4 and report salary income and business income.

Where is the benefit for senior citizens?

If senior citizens are taking special exemption, then the existing slab is correct. If you are taking an exemption of 50 thousand on pension income, then it is better to stay in the existing slab. Do not shift if you are taking medical insurance, exemption of medical expenses. If 50,000 exemption is taken in 80TTB then do not switch. If you are a doctor, lawyer, engineer or chartered accountant then you can join the new scheme. The special thing is that every year you can choose between new or old scheme.

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