The evolution of tax regulations witnessed a significant milestone with the amendments to Section 115BAC of the Income Tax Act, 1961, brought forth by the Finance Act of 2023.

1. Income Tax Regime Dilemma – New VS. Old

2. The evolution of tax regulations witnessed a significant milestone with the
amendments to Section 115BAC of the Income Tax Act, 1961, brought forth by
the Finance Act of 2023. This watershed moment in tax legislation not only aimed
at simplifying tax filing procedures but also sought to enhance transparency and
accountability in the tax ecosystem, marking a pivotal juncture in the journey
towards a more taxpayer-centric tax regime. Section 115BAC of the Income Tax
Act, 1961 underwent significant changes with the Finance Act of 2023, making
the new tax regime the default option from the assessment year 2024-25
onwards.
Old Regime Slab Rates:-

4. Note: All eligible deductions and exemptions available in old regime only Following chart explains difference
between New Tax Regime from AY 2024-25 V/s. New Tax Regime for AY 2021-22 to AY 2023-24.

5. Here’s a breakdown of the key points:
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1. Default Tax Regime: Starting from the assessment year 2024-25, Section 115BAC of the Income
Tax Act establishes the new tax regime as the default option, applicable to individuals, HUFs,
AOPs, BOIs, and artificial juridical persons, excluding partnership firms, companies, and
cooperative societies.
2. Option to Opt Out: Taxpayers, those with income from business or profession, who wish to opt
out of the new regime and choose the old one must file Form 10-IEA within the specified due
date under Section 139(1) of the Act.
3. Flexibility for Non-Business Taxpayers: Taxpayer without income from business or profession can
select their preferred regime while filing their return of income under Section 139(1) of the Act,
with the option to switch each assessment year.
4. Impact of Previous Year’s Regime: The decision made for the assessment year 2023-24 regarding
the tax regime does not affect the decision or procedure for the assessment year 2024-25.It
means, irrespective of whether such taxpayer had filed ITR for AY2023-24 under the Old Regime
or the New Regime, Income under PGBP or not, Default would be New regime for the assessment
year 2024-25.

6. 5. Consequences of Failure to opt out of New Regime: If a taxpayer with PGBP income,
fails to file Form 10-IEA or taxpayer without PGBP Income fails to select their
preferred regime in ITR within the due date specified under Section 139(1) of the
Act for opting out of the default new tax regime, they become ineligible to switch
to the old regime in the assessment year, and taxes will be applicable as per the
default new tax regime.

7. For persons having income from business / profession, there is no requirement that the return of
income should also be filed within due date specified u/s.139(1). Thus, if an assessee has filed Form
No. 10-IEA for opting out from default New Tax Regime (i.e. to opt out from Section 115BAC), but
fails to furnish his ITR u/s. 139(1) of the Act and furnishes belated ITR or updated ITR under section
139(4) or Section 139(8A) of the Act respectively, the assessee shall be eligible to pay tax as per the
Old Regime on the basis of Form 10-IEA filed within due date specified u/s. 139(1) of the Act.
6. Changing Option in Revised Return: Once the option is exercised, it cannot be changed for the same
assessment year, as per the provisions of Section 115BAC(6) of the Act. Even filing a revised return
of income under Section 139(5) of the Act does not allow changing the option.
7. Changing Option in Subsequent assessment year: The decision to opt out of Section 115BAC in the
assessment year 2024-25 does not impact subsequent assessment years for certain taxpayers. For
those with income from business or profession, once opting for the old regime, they cannot switch
back within the same year. However, such person can opt out from Old Regime in subsequent AY
(say AY 2025-26) by again filing Form 10-IEA, but then such person shall never be eligible to opt for
Old Regime again. However, for taxpayers without business or professional income, each year’s
decision remains independent of prior selections, allowing flexibility in choosing between Section
115BAC and the old regime in ITR Form itself.
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