Income Tax News: Finance Minister Nirmala Sitharaman announced in the Union Budget 2023 that the new tax structure will serve as the default option for income taxpayers.
This means that if a person fails to specify their preference between the new and old tax systems, their income tax will be calculated according to the new tax structure. Finance Minister Nirmala Sitharaman is scheduled to present the interim budget on 1 February 2024. There are high expectations from the general public regarding this budget.
What is the Old Tax System?
The old tax system, also known as the traditional tax system, offers approximately 70 deductions and exemptions to help reduce taxable income. It allows for a deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. This system was in place before the introduction of the new tax system, and taxpayers still have the option to utilize it.
What is the New Tax System?
The new tax system, introduced in 2020, simplifies the tax structure by eliminating most deductions and exemptions. It operates under Section 80 JJA. According to the Budget 2023, the new tax system now serves as the default option, with an increased basic exemption limit and exemption limit of Rs 7 lakh.
How to Change Tax Arrangements
Follow these steps when filing your income tax returns to switch between different tax arrangements:
- Select the arrangement: Choose between the old and new tax arrangements based on eligibility.
- Verify eligibility: Salaried individuals can directly select their preferred option on the ITR form, while businesses/professionals must complete Form 10IE by 31 July of the relevant year.
- Submission process: For salaried individuals, select the desired arrangement on the ITR form and complete the filing process.
Check and Submit
- Review your ITR details carefully.
- Use Aadhaar OTP or PAN, along with bank details, to electronically verify your ITR.
- Once you have chosen your preferred system, electronically submit your ITR.
Also Read: Attention Taxpayers: Receive Notice Under Section 142(1) of Income Tax Act! Stay Informed with the Latest Income Tax News