Filing of Form 10-IE if the persons is not having Income from Business & Profession

The finance ministry introduced a ‘New tax regime’ in the Finance Act 2020.
Form 10IE is a declaration made by the return filers for choosing the ‘New tax regime’
So first, let us understand what do you mean by the new tax regime? 
A tax regime refers to the computation of the individual’s income tax liability after considering all the deductions and tax benefits. 

What is the old tax regime or existing tax regime? 

When we refer to the old/existing tax regime it means the tax on the income which is calculated as per the old tax slabs.Under this regime, various levels of income are taxed according to slab available after considering all the deductions under Chapter VIA (such as deduction under section 80C, 80D, etc) as well as other tax benefits such as HRA, LTA and many others as allowed in the Income Tax Act 1961.

The existing regime levies tax at 3 levels i.e  5% tax on income between Rs 2.5 Lakh-Rs.5.00 Lakh, 20% tax on income between Rs.5.00 Lakh to Rs. 10 Lakh and 30% tax on income above Rs. 10 Lakhs. A  4% education cess is levied on the tax calculated on the above.

What is the new tax regime?

The new tax regime allows for lower tax rates while most of the deductions and tax benefits allowed in the old/existing tax regime are not allowed. 

Click here to check the Income-tax slab applicable to you as per New regime.

The choice for selecting the tax regime is to be made before filing the income tax return of the relevant financial year. The taxpayer has to communicate the selection of tax regime by sending an intimation through Form 10IE to the income tax department before the filing of ITR. 

Applicability of New tax regime

The new tax regime is applicable from the FY 2020-21, i.e. AY 2021-22.
The choice between ‘New tax regime’ and ‘Old tax regime’ is available to individuals and HUF, which can be opted by filing Form 10IE.

How to provide the declaration of choice between both regimes?

If you are salaried, your employer might ask for a declaration from you to choose between the old or new tax regime.

Scenario 1. Employer has asked for a declaration to choose the regime
In such a case, you will have to declare the choice of the regime by the due date as allowed by the employer. The TDS liability will be calculated according to the regime declared by the employee.
However, if the employee fails to provide the declaration then the employer will calculate the default TDS liability as per the old tax regime.

Scenario 2. Employer has not asked for any declaration 
In such a case, the employer will go ahead and will calculate the default TDS liability as per the old tax regime. Also, the regime selected for deducting TDS will be provided in Form 16 furnished by the employer to the employee. 

However, in both the above situations, the employee will have an opportunity to switch to the regime other than the one declared to employer for TDS deduction at the time of filing ITR.
Please remember to fill declaration under Form 10IE before 31st July (unless extended)

How to inform the IT department of the selection of the tax regime?

The Central Board of Direct Taxes has released Form 10IE. Any individual or HUF who wishes to pay income tax as per the new tax regime can communicate to the income tax department by filing Form 10IE.

Also, Form 10IE is required to be filed if the taxpayers want to opt out of the new tax regime. Form 10IE to be furnished before filing the income tax return of the relevant assessment year.

Time limit for filing form 10IE

For individuals with business income, Form 10IE can be filed before the due date of filing of ITR, i.e. 31st July or another date (in case due date is extended by the government)

For individuals having a salary income, Form 10IE can be submitted before or at the time of filing of ITR.

Contents of Form 10IE

Basic details required to file Form 10IE are mentioned below:

• Name of the individual / HUF
• Confirmation of whether the individual or HUF have any income under ‘Profit or gains from business and profession.
• PAN number
• Address
• Date of birth/ date of incorporation
• Nature of business/ profession (Mandatory in case of business income)
• Confirmation in ‘yes/no’ of whether the taxpayer has any unit in IFSC (International financial service centre) as mentioned in sub-section (1A) of section 80LA. Suppose the answer is yes, then details of the unit to be provided. 
• Details of any previous Form 10IE filed.
• Declaration