Old Vs New Tax Regime: What Is The Frequency Of The Changeable?

Old Vs New Tax Regime: Taxpayers should be aware that as of today (Monday), the new 2024–25 fiscal year will tax their income by default under the new tax system. The public still has the choice to choose the previous tax system if it better serves their financial objectives, nevertheless. The nature of the taxpayer’s occupation determines how frequently and how simple it is to transfer between the tax regimes.

Salaried Taxpayers

A salaried person can switch between the tax regimes very easily, and they can do it more than once during each fiscal year. When submitting their Income Tax Return (ITR) for the applicable year, they can easily select the tax regime that best suits them. Employers are required by the Central Board of Direct Taxes (CBDT) to offer their employees the choice of which tax regime to use when submitting their tax returns.

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Business Or Professional Income Taxpayers

Taxpayers with professional or commercial income, however, may only choose to make this modification to their taxation scheme once. For example, once a taxpayer with business income chooses the new tax regime in FY2023, they are not allowed to switch back to the previous arrangement. Furthermore, they will not have the option to opt out of the new tax structure in the future. It is imperative that they take advantage of this opportunity to modify their tax structure. By submitting Form 10-IEA before the deadline for filing returns, taxpayers can choose to opt out of the new tax system.

Old vs New Tax Regime

Due to the numerous tax exclusions and deductions that the system offers the taxpayer, the previous tax regime is preferable. Individuals can claim advantages on home rent allowance (HRA), leave travel allowance (LTA), and deductions under Sections 80C, 80D, 80CCD(1b), 80CCD(2), among many other provisions, which helps lower their tax liability.

The new tax system raises the thresholds for taxpayers, giving them more space before they must pay tax, but also offers fewer tax breaks and exemptions. The existing tax slabs for the fiscal year 2023–2024 are shown in the table below.

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