Filing Income Tax Returns for Salary, Freelance, and Business Income Under the New Tax Regime (FY 2025-26)

The introduction of the new tax regime for the Financial Year 2024-25 (Assessment Year 2025-26) has brought about significant changes in how taxpayers file their Income Tax Returns (ITR). The new tax regime simplifies the tax structure by eliminating most deductions and exemptions in exchange for reduced tax rates. While this option offers considerable tax savings for many individuals, it requires careful consideration when filing ITR, especially for salaried employees, freelancers, and business owners. Let us explore how the new tax regime impacts salary income, freelance income, business income, and provide a step-by-step approach to filing ITR under the new regime. Additionally, we’ll highlight the benefits of using TaxBuddy to ensure a seamless, efficient filing process.

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Table of Contents

• How the New Tax Regime Affects Salary Income

• Filing ITR for Freelance Income Under the New Regime

• Business Income: Filing ITR under the New Tax Regime

• Step-by-Step Guide to Filing ITR Under the New Regime

• Benefits of Filing ITR through TaxBuddy

• Conclusion

• FAQs

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How the New Tax Regime Affects Salary Income

The new tax regime offers lower tax rates but eliminates most exemptions and deductions, such as the standard deduction, HRA (House Rent Allowance), and deductions under sections like 80C, 80D, and 80G. For salaried individuals, this means that while the income tax rates are reduced, there will be fewer opportunities for tax savings. Under the new tax regime, salary income is taxed at lower rates, but employees who previously benefited from exemptions like HRA or deductions for investments will need to reassess whether the new regime benefits them more than the old one.

Here’s how the new tax regime affects salary income:

• No Deductions: Deductions related to investments (like PPF, EPF, insurance premiums), house rent allowance (HRA), or home loan interest are not available.
  

• Lower Tax Rates: The tax rates under the new regime are lower than those under the old regime for the same income slabs.
  

• Simple Structure: For individuals who do not have large deductions, the new regime provides a simpler and more straightforward tax structure, reducing the burden of maintaining various tax-saving investments.

For many taxpayers, this could result in a lower overall tax liability. However, it’s essential to perform a thorough comparison with the old regime, particularly for those who benefit from numerous deductions.

Filing ITR for Freelance Income Under the New Regime

Freelancers and independent professionals often face different tax implications when compared to salaried individuals, especially under the new tax regime. Freelance income is typically considered "business income" and is taxable under the head "Profits and Gains of Business or Profession" in the Income Tax Act. The new tax regime affects freelance income in the following ways:

• No Deductions for Business Expenses: Freelancers may not be able to claim deductions like the expenses related to running their business, such as office supplies, utilities, or travel expenses, under the new regime.
  

• Tax Calculation: Freelancers can still avail of the lower tax rates of the new regime but without the deductions available under the old regime. This means their taxable income will be higher than it would have been if they had filed under the old tax regime, assuming they had significant business expenses to claim.
  

• Filing Requirements: Freelancers need to maintain accurate records of their income and expenses to comply with the tax filing requirements. They must ensure that their ITR filing accurately reflects all business-related income, as the lack of deductions could affect their overall tax liability.

While the new regime simplifies the tax process, it may not always be the most beneficial for freelancers who can deduct business-related expenses. In such cases, they may want to reconsider whether the old regime provides a more advantageous option for them.

Business Income: Filing ITR under the New Tax Regime

For business owners, the new tax regime brings both advantages and challenges. Like freelancers, businesses can benefit from the lower tax rates, but they will also lose access to various deductions and exemptions that were previously available. Here’s how the new tax regime affects businesses:

• No Deductions for Business Expenses: Businesses can no longer claim deductions for various expenses such as depreciation, business-related travel, employee benefits, and contributions to retirement funds under the new regime. This may result in a higher taxable income compared to the old regime.
  

• Simplified Tax Structure: For small businesses with minimal deductions, the new tax regime offers a more straightforward approach. Businesses will not need to maintain detailed records of deductible expenses or navigate the complexities of tax planning strategies that were required under the old tax regime.
  

• Revised Tax Rates: While businesses will pay taxes at lower rates under the new regime, those with significant operational expenses may find the new tax structure less beneficial than the old regime. This is especially true for larger businesses with substantial investment opportunities.

For businesses, a careful analysis is essential to determine whether filing under the new regime or the old regime will result in a lower tax liability, taking into account the nature of their expenses and income.

Step-by-Step Guide to Filing ITR Under the New Regime

Filing ITR under the new tax regime can seem complicated, but with the right approach, it can be a smooth process. Here’s a step-by-step guide to filing ITR under the new regime:

• Determine Eligibility: First, confirm that you are eligible for the new tax regime. This regime is available to all individual taxpayers, HUFs, and AOPs. Ensure that you do not have income from business or profession that requires auditing, as these cases may have different requirements.
  

• Collect Necessary Documents: Gather all the required documents, such as your Form 16 (for salaried employees), TDS certificates, bank statements, and details of any other income sources.
  

• Choose the New Tax Regime: When filing your return, select the new tax regime option. The income tax software will automatically calculate the tax liability based on the reduced tax rates.
  

• Fill Out the ITR Form: Complete the ITR form with details of your income, including salary, business income, and any other applicable sources. Ensure that you report your total income correctly.
  

• Submit and Pay Tax: After completing the form, review the information, and submit the ITR. If there is any tax due, ensure it is paid before submitting.
  

• Verify the Return: Once the return is submitted, complete the e-verification process through an Aadhaar OTP or digital signature.

TaxBuddy can simplify this process by providing a user-friendly interface and expert assistance to ensure that all necessary steps are followed.

Benefits of Filing ITR through TaxBuddy

TaxBuddy is an excellent platform for those filing ITR under the new tax regime. Here are some key benefits of using TaxBuddy:

• AI-Powered Filing: TaxBuddy uses AI to ensure your filing is accurate, minimizing errors that could lead to delays or penalties.
  

• Expert Assistance: If you need help navigating the complexities of the new tax regime, TaxBuddy offers expert assistance to guide you through the filing process.
  

• Simplified Tax Calculation: TaxBuddy helps calculate the correct tax liability based on the new regime, ensuring that you benefit from the reduced tax rates while avoiding common mistakes.
  

• Faster Processing: With its streamlined process, TaxBuddy helps you file your return quickly, which can lead to faster refunds.

Conclusion

Filing ITR under the new tax regime offers a simpler approach with lower tax rates but without the benefit of deductions and exemptions. It’s important to carefully evaluate whether this regime is more advantageous for you, especially if you are a salaried employee, freelancer, or business owner. The new regime can lead to tax savings if you don’t rely heavily on deductions. However, if you have significant deductions, the old regime might still be beneficial. TaxBuddy provides a user-friendly platform to navigate the complexities of ITR filing, ensuring a smooth and accurate process.

For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.

FAQs

Q1: Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?

Yes, TaxBuddy offers both self-filing and expert-assisted plans. This allows you to choose the level of support that suits your comfort level and the complexity of your tax situation. If you prefer to handle your ITR independently but still want guidance, the self-filing plan provides all the necessary tools. For those who require more personalized assistance, the expert-assisted plan connects you with professionals who ensure that your return is filed accurately and in compliance with all tax regulations.

Q2: Which is the best site to file ITR?

TaxBuddy is an excellent option for ITR filing because it simplifies the process with its user-friendly platform, step-by-step guidance, and expert assistance. The platform is designed to reduce errors, ensure compliance, and make filing a hassle-free experience. It’s particularly beneficial for those who may not be familiar with tax filing procedures or those seeking professional help to ensure accuracy and maximize deductions.

Q3: Where to file an income tax return?

You can file your ITR directly on the official Income Tax Department portal atincometax.gov.in or through platforms like TaxBuddy. TaxBuddy offers a more streamlined experience with additional features like expert assistance, TDS credit verification, and tax-saving suggestions, making it an attractive option for taxpayers looking for convenience and accuracy.

Q4: Can I file my ITR after the deadline without penalties?

No, you cannot file your ITR after the deadline without incurring penalties. If you miss the ITR filing deadline, you can still file a belated return, but penalties will be applicable. The penalty can go up to ₹5,000 for delays beyond the original due date, and interest will be charged on any unpaid taxes. However, the belated return must be filed by December 31, 2025, for the Financial Year 2024-25 (Assessment Year 2025-26).

Q5: What happens if I fail to file ITR within the extended deadline?

If you fail to file your ITR by the extended deadline of September 15, 2025, you can still file a belated return by December 31, 2025. However, you will face penalties and your refund processing will be delayed. Filing after the due date also means you won’t be eligible for certain tax benefits or exemptions available to on-time filers.

Q6: How do I check the status of my income tax refund?

To check the status of your income tax refund, you can visit the official Income Tax Department portal. Log in with your PAN and assessment year details, and the system will show the status of your refund. If you filed through TaxBuddy, you can also track your refund status directly on the platform or contact their support team for assistance.

Q7: Does TaxBuddy assist with TDS credit verification?

Yes, TaxBuddy helps verify your TDS credits to ensure that they are correctly reflected in your return. TDS credits are an important part of calculating your tax liability and ensuring you don’t overpay. TaxBuddy ensures that your TDS details are accurate, which minimizes the risk of discrepancies that could delay your refund.

Q8: How long does it take for TaxBuddy to process an ITR filing?

TaxBuddy aims to process your ITR filing as quickly as possible. For simple returns, the process can be completed within a few hours. For more complex returns, such as those involving expert assistance, the process may take longer, depending on the complexity of your financial situation. However, the platform works efficiently to ensure that your filing is completed on time and with the highest level of accuracy.

Q9: What if I file ITR after the extended deadline?

If you file your ITR after the extended deadline of September 15, 2025, you can still submit a belated return by December 31, 2025. However, filing late will incur penalties and interest on any unpaid taxes. Additionally, your refund processing will be delayed as the tax department prioritizes returns filed on time.

Q10: Are there penalties for errors in my ITR filing?

Yes, errors in your ITR filing can lead to penalties, interest, and delays. Common mistakes, such as incorrect income reporting, missing deductions, or TDS mismatches, can trigger penalties and cause processing delays. To avoid such issues, it’s important to ensure that your return is accurate. Using a platform like TaxBuddy can help minimize errors, as it provides built-in tools for verification and accurate tax calculations.

Q11: Can I make corrections in my ITR after filing?

Yes, you can file a revised return to correct errors in your ITR, such as missing deductions, incorrect income reporting, or TDS mismatches. The revised return can be filed before the end of the assessment year. If any discrepancies are found after your original return has been processed, filing a revised return ensures that you rectify the mistake and avoid penalties.

Q12: Does TaxBuddy support all tax regimes for ITR filing?

Yes, TaxBuddy supports both the old and new tax regimes for ITR filing. The platform helps you evaluate both options and choose the one that provides the best tax benefits based on your specific financial situation. Whether you’re eligible for exemptions under the old regime or prefer the simplified new regime, TaxBuddy ensures that you make the most informed decision when filing your return.