The Central Board of Direct Taxes (CBDT) has recently introduced Form 10-IEA, a significant step in facilitating the continuation of the old income tax regime for the ongoing financial year. This move is especially crucial as the default tax option shifted to the new regime from the financial year 2023-24, as mandated by changes in Section 115BAC under the Finance Act 2023. In this article, we delve into the specifics of Form 10-IEA, its purpose, and who should utilize it during Income Tax Return (ITR) filing.
Navigating the Transition:
Previously, individuals could express their preference for the new tax regime using Form 10-IE. However, starting from the financial year 2023-24, the new regime has automatically become the default option. To address this transition, Form 10-IEA has been introduced, aligning with recent amendments. Individuals with income from business or profession are now required to submit this form within the specified timeframe under Section 139(1) of the Income-tax Act, 1961.
Importance of Form 10-IEA:
Sujit Bangar, Founder of Taxbuddy.com, emphasizes the significance of Form 10-IEA, stating, “Understanding the process and requirements associated with Form 10-IEA is crucial. Submitting this form before the specified deadline allows individuals to express their tax regime preference.” This form is mandatory for those who wish to continue with the old income tax regime.
Mandatory Submission Details:
Form 10-IEA requires essential information such as name, Permanent Account Number (PAN), assessment year, and current status. It serves as a standalone document and is separate from the Income Tax Return (ITR) forms. Individuals must indicate whether they intend to opt out of or re-enter the default new tax regime, along with specifying relevant dates for opting out or re-entering the new tax regime.
Yeeshu Sehgal, Head of Tax Market at AKM Global, further explains, “Form No. 10-IEA shall be furnished electronically either under digital signature or electronic verification code. The Form No. 10-IEA is to be filed on or before the return filing due dates, in the case of a person having income from business or profession.”
Filing ITR-4 and Form 10-IEA:
ITR-4, also known as SUGAM, is designed for individuals, HUFs, and firms having a total income of up to ₹50 lakh with business and profession income under sections 44AD, 44ADA, or 44AE. Taxpayers opting for ITR-4 will now need to file Form 10-IEA to opt out of the new tax regime, making the proper validation of this form crucial during submission.
Opting Out and Re-entering:
Individuals without business income can opt out of the new tax regime directly during their tax return filing. However, those wishing to re-enter the new tax regime after opting out must submit Form 10-IEA. Sehgal adds, “It effectively means that the taxpayers with business income have the option to opt-out and stay with the old regime by filing Form 10-IEA while filing ITR-4, and taxpayers with no business income can exercise such option in the return form itself.”
Ensuring accurate and valid verification through a digital signature or electronic verification code is essential for the proper submission of Form 10-IEA.
