New to Old Tax Regime: How to choose Old Income Tax Regime when filing ITR for FY 2023-24

Current income tax rules allow taxpayers to choose between the old and new tax regimes for salary tax deductions. This choice is valid throughout the financial year.

If an individual taxpayer does not choose the old tax system before April 1, 2023, their employer will deduct tax from their salary in accordance with the new system. This is because the new tax system will be the default option beginning in the financial year 2023-24. The interim budget for 2024 contains no adjustments to the income tax laws. As a result, for the current financial year, 2024-25, the new tax regime will remain the default choice.

Which individuals will be subject to the new tax regime by default?

According to the Income Tax Department’s website, this applies to individuals, Hindu Undivided Families (HUF), Association of Persons (AOP) (other than cooperative societies), Body of Individuals (BOI), and Artificial Juridical Persons.

When submitting an income tax return, how to choose the Old tax regime?

Switching while submitting the ITR is feasible (you must choose a checkbox for an old or new regime) and you must specify the regime in a statement in Form 10IEA.

The Income Tax website states that if you are eligible to file income returns in ITR 1 and 2 and would want to choose the Old Tax Regime, you must choose the appropriate option in ITR and submit the return by the relevant deadline. Form 10-IEA must be filed by the deadline specified in u/s 139(1) if you are qualified to file a return of income in ITR 3, 4, and 5. Compare the tax liability under the old and new tax regimes before submitting the return. Kindly use the ‘Income Tax Calculator’ link to calculate your tax obligation. “Do you wish to opt out of the new tax regime under 115BAC(6)e? ” is the question that appears on the notified ITR forms.

If the option “no” is selected, the income tax return form will calculate the amount of income tax due based on the slabs of the new tax regime. Choosing “yes” indicates to the income tax department that the taxpayer prefers the Old Tax Regime. The income tax slabs from the old tax regime will be used to calculate the amount of income tax due in this case.

Income Tax Regime:

• How often are you able to switch? Every year, a person can greatly reduce their tax burden by choosing to switch between the old and new tax regimes. It is noted that this option is only available to salaried employees or no business income. This switching facility is not available to people who make money from their businesses.
• It is advised to ensure that your ITR is filed by the deadline if you choose to file under the old tax regime. Your income tax will be computed under the new tax system if your ITR is filed after the deadline.

Old Tax Regime: Important Observations

• Under the Old tax regime, an individual may claim several income deductions and tax exemptions. Section 80D covers health insurance premiums paid and senior citizen medical bills. Section 80CCD (1B) covers investments in the National Pension System (NPS), House Rent Allowance (HRA) for rent paid during the financial year and Leave Travel Allowance (LTA).
• It is important to note that employers will tax deducted at source (TDS) based on the new tax system starting from April 1, 2023, assuming an individual taxpayer does not choose to continue using the previous tax regime.