Form 10IE of the Income Tax Act: A Complete Guide About Choosing the New Tax Regime

It is mid-2024 and you are doing tax planning for FY 2024-2025. The new tax regime has now automatically become the default in the 2023 Budget, which means that taxpayers are now automatically opted into this regime when they file their Income Tax Return (ITR). The earlier days of manually choosing the tax regime are over—unless, of course, you want to switch back into the old tax system or are into business income. In those cases, you would use Form 10IEA or Form 10IE

The government has massively simplified the tax structure, but the old and new regimes remain a choice for most; certainly for taxpayers with multiple income streams. In this article, we break down everything you need to know about Form 10IE and its implications, incorporating the latest changes announced in the July 2024 Budget.

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Table of Contents

Old and New Tax Regimes: A Comprehensive Overview

Switching Between Old and New Tax Regime

What is Form 10IE of the Income Tax Act?

Time Limit to File Form 10IE

Content of Form 10IE

Steps to File Form 10IE

Steps to Download Form 10IE

Conclusion

Most Asked Questions

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Old and New Tax Regimes: A Comprehensive Overview  

The Old Tax System allows taxpayers to use many different ways to reduce their taxable income, like investments under Section 80C and medical insurance payments under Section 80D. Taxpayers can also get benefits like Leave Travel Allowance (LTA) and Housing Rent Allowance (HRA). The old tax regime works best for people who have a lot of investments that save them on taxes.

On the other hand, the New Tax System has lower tax rates but does not allow most deductions. From FY 2023-24, the new tax regime is the default regime. Taxpayers earning less or not fully utilizing available deductions may find it advantageous to switch to the new tax regime.

Here’s a comparison of the slab rates between old and new tax regime as per the 2024 Budget:

New Tax Regime (FY 2024-25)

Income Slab	Tax Rate
Rs. 0 - Rs. 3,00,000	NIL
Rs. 3,00,000 - Rs. 7,00,000	5%
Rs. 7,00,000 - Rs. 10,00,000	10%
Rs. 10,00,000 - Rs. 12,00,000	15%
Rs. 12,00,000 - Rs. 15,00,000	20%
Above Rs. 15,00,000	30%

Old Tax Regime (FY 2024-25)

Income Slab	Tax Rate
Rs. 0 - Rs. 2,50,000	NIL
Rs. 2,50,000 - Rs. 5,00,000	5%
Rs. 5,00,000 - Rs. 10,00,000	20%
Above Rs. 10,00,000	30%

Note: Under the new tax regime, incomes up to Rs. 7,00,000 are effectively exempt from tax due to the Section 87A rebate.

Taxpayers must notify the Income Tax Department using Form 10 IE of their selected tax regime prior to filing their income tax returns. Individuals and Hindu Undivided Families (HUF) having income falling under the PGBP (Profit and Gains of Business or Profession) category are eligible to choose between the Old Tax Regime and the New Tax Regime.

Switching Between Old and New Tax Regime

Switching between the old and new tax regimes is relatively straightforward for salaried individuals but more complex for those with business income. The new tax regime offers lower rates but fewer exemptions, while the old regime allows more deductions, such as Section 80C and HRA.

It is often difficult for individuals with business income to switch between the old and new tax regimes. They can choose the new tax regime, but once they switch, they usually get only one chance in their life to go back to the old tax regime. Once they return to the old regime, they can't switch to the new regime again. Hence, individuals with business income will typically file Form 10IE twice, once to opt for the new regime and again to revert to the old regime, if they want. 

On the other hand, salaried individuals have more flexibility. They can switch between the old and new regimes every year. Salaried taxpayers do not need to file Form 10IE when selecting the new regime; they can make their choice directly through their ITR form during the filing process.

What is Form 10IE of the Income Tax Act?

Form 10IE is an important form that allows individuals and Hindu Undivided Families (HUFs) with business or professional income who want to opt for the new tax regime under the Income Tax Act. It is a declaration of intent to follow the new regime, which must be submitted before filing the ITR.

• Who must file Form 10IE?

  • Taxpayers who file ITR-3 and ITR-4 with income under the Profits and Gains of Business or Profession (PGBP), and who want to opt for the new regime must file Form 10IE.

    
    

• Who does not need to file Form 10IE?

  • Salaried individuals and those without business or professional income can choose the new regime directly through their ITR form and do not need to file Form 10IE.

Time Limit to File Form 10IE

The deadline for submitting Form 10IE depends on the nature of income:

• Non-Audited Taxpayers: Individuals and Hindu Undivided Families (HUFs) that do not require audits must furnish Form 10IE on or before the deadline for filing ITR. For FY 2023-24, the deadline is July 31, 2024.

  
  

• Audited Taxpayers: For individuals and HUFs requiring audits under Section 44AB, the deadline for Form 10IE submission is on or before the audit report due date. For FY 2023-24, the deadline for submitting the audit report is September 30, 2024.

Failure to submit Form 10IE before filing the ITR will result in being taxed under the default regime, that is, the new tax regime.

Content of Form 10IE

Form 10IE comprises the following sections

Part A: Assessee’s personal information

• Name

• PAN

• Address

• Email id

• Mobile Number

• Aadhar Number

Part B: Declaration 

• Check the box indicating if the taxpayer is a Hindu Undivided Family (HUF) or an individual

• Indicate which applicable fiscal year the taxpayer wants to choose the new tax structure for

• Check the box to indicate if the taxpayer receives income from a business, a profession, or both

• Include information on any deductions, such as Sections 80C and 80D, that are claimed under Chapter VI-A of the Income Tax Act

Part C: Verification

The taxpayer or a designated signatory must verify the form.

Steps to File Form 10IE

To opt in or out of the new tax system included in the Union Budget 2020, complete Form 10IE. A taxpayer must submit Form 10IE to the income tax department to indicate their desire to opt-in to the new tax regime. Before filing the income tax return (ITR) for the applicable assessment year, the form needs to be submitted. Here's a step-by-step tutorial on using the Income Tax Portal to complete Form 10IE:

Step 1: Visit the Income Tax e-Filing Portal and enter your login details.

Step 2: From the drop-down menu, choose "Income Tax Forms" after clicking on the "e-File" option. Form 10IE can be chosen from the list of forms.

Step 3: Provide the HUF's or the individual's Permanent Account Number (PAN) on the form.

Step 4: Choose the assessment year that the form is being submitted for. For example, Choose AY 2023-24 if you are reporting taxes on income received in FY 2022–2023.

Step 5: Form 10-IE will appear once you click "Let's Get Started." Form 10-IE comprises four sections: 

• Assessing Officer

• Fundamental Data 

• Supplementary Data 

• Verification

The "Assessing Officer" section is the first. This section's details are already filled in. All you need to do is "confirm" these particulars.

Step 6: The majority of the fields pertaining to your personal information will automatically fill in. You must submit other data, such as the specifics of any IFSC units you may have, and a declaration of intent to withdraw your choice to pay taxes under the new regime in any prior year that you may have exercised it. Give all the details and keep this data safe. 

Step 7: You will be able to self-declare all of the information in the verification area. Check all the details, and if everything is correct, save the data. In order to examine the Form 10IE, click "Preview." 

Step 8: Once your self-declaration is complete, e-verify using one of the following methods: Aadhaar OTP; Digital Signature Certificate (DSC); or Electronic Verification Code (EVC).

Step 9: Click "Submit" once everything has been verified. 

Step 10: Following form submission, an acknowledgment number will be provided to you. Keep this number handy for when you need it.

Step 11: You will receive the code on your registered email address or mobile number if you choose the EVC mode of verification. To complete the verification process, enter this code.

Steps to Download Form 10IE

Use the following procedures to download a copy of your Form 10 IE filing from the Income Tax Portal: 

Step 1: Visit the Income Tax e-Filing Portal and enter your login details.

Step 2: From the drop-down menu, choose "Income Tax Forms" after clicking on the "E-File" option. Next, choose "View Filed Forms." 

Step 3: From the drop-down list, choose "Income Tax Return" and the appropriate assessment year.

Step 4: Press the "Submit" button. A list of all the returns and forms submitted for the chosen assessment year will be displayed to you. Locate Form 10 IE and choose the number of the acknowledgment.

Step 5: The form's details will be displayed on the following screen. For a copy of the form, click the "Download" button.

Step 6: If necessary, you can print out the completed form or store it for your records.

Conclusion

Form 10IE, which allows you to select between the previous and current tax regimes, must be familiar to you after going through this article. If you're having trouble deciding between the two regimes, look for experts to provide you with a side-by-side comparison. If you require help filing your ITR electronically, consult a professional right away.

FAQ

Q1. Is the new tax regime more beneficial?

The new tax system is better, especially for individuals who haven't invested in tax-saving options and like to have more liquidity. It is more advantageous for new employees or older people who prefer flexibility instead of long-term tax-saving plans.

Q2. Is it possible to switch to the old tax regime while filing the ITR?

Yes, individuals or HUF taxpayers without income from business or profession can choose between either regimes each year when filing their taxes.

Q3. Who should file Form 10IE?

Taxpayers who want to opt for the old tax regime and have income under "Profits and Gains of Business and Profession" must file Form 10IE. Since the new tax regime is the default, filing Form 10IE is necessary to switch back to the old regime.

Q4. What if I forget to file Form 10 IE?

Starting from the financial year 2023-24, the new tax regime has been set as the default option for taxpayers. As a result, Form 10IE is no longer mandatory unless you wish to switch to the old tax regime.

Q5. Can I choose the old tax regime while filing my ITR if my employer has deducted TDS under the new regime?

Yes, salaried individuals can switch between regimes at the time of filing their ITR, even if TDS was deducted under the new tax regime by their employer.

Q6. Which is better: the old tax regime or the new tax regime?

The new tax regime is more beneficial for those with taxable income up to ₹15 lakh who prefer lower rates without deductions. The old tax regime is ideal for high-income earners or those who utilize tax-saving investments like PPF, home loans, and insurance premiums.

Q7. Can I switch to the old tax regime while filing my ITR?

Yes, individuals or HUF taxpayers without business income can switch between the new and old regimes each year while filing their ITR.

Q8. Do I need to file Form 10IE if I don’t have business income?

No, if you do not have business income, you don’t need to file Form 10IE to opt for the new tax regime. You can simply select the desired tax regime when filing your ITR (ITR 1 or ITR 2).

Q9. Is Form 10IE mandatory starting FY 2023-2024?

Form 10IE is only mandatory for taxpayers with business income who want to switch from the default new tax regime to the old regime. For individuals without business income, the switch can be made directly while filing the ITR.

Q10. What should I do if I encounter errors like “Invalid Input” or “Submission Failed” while submitting Form 10IE?

Ensure that your contact or key person details are updated under “My Profile” on the Income Tax portal. After updating, re-login and submit the form again.