Income Tax: How To Shift From The New To The Old Tax Regime?
For the Assessment Year (AY 2024-25) individual taxpayers have the option to switch from the new tax regime to the old one, even if they have initially informed their employers that they opted for the new regime. The new tax regime would be the default choice for income taxpayers, so an individual has to manually select the old tax regime if he/ she wants to shift. Before selecting this option taxpayers have to calculate their income tax based on the old regime's established slabs.
Old tax Regime Slabs
The income tax rates under the old tax regime vary based on age with higher exemptions for senior citizens, and super senior citizens. For those below 60 years, no tax is imposed on incomes up to Rs 2.5 lakh with a 5 per cent tax on incomes between Rs 2,50,001 and Rs 5 lakh.
Incomes ranging from Rs 5,00,001 to Rs 10 lakh will attract a tax rate of 20 per cent, while incomes above Rs 10 lakh are taxed at 30 per cent. These rates are higher than those under the new tax regime, where income up to Rs 7.27 lakh is exempt from tax, however, the old regime allows for more deductions. If you are a taxpayer who is earning more than Rs 15 lakh and with total deductions exceeding Rs 1.5 lakh you can consider the old tax regime.
How To Shift From New Tax Regime To Old Tax Regime?
CBDT had notified all ITR Forms, including ITR Forms 1 to 6 for AY 2024-25, and these forms offer the option to select the old tax regime within the form itself. For instance, if your form is The ITR-1 (SAHAJ), the most used form filed by residents having a total income of up to Rs. 50 lakh and having income from Salaries, the ITR form will ask the ITR filer, "Do you wish to exercise the option u/s 115BAC(6) of opting out of the new tax regime? (with default option- No)".
Responding to the question with 'Yes' will make you opt out of the new regime and tax will be calculated based on the old regime's slabs. If you are an individuals earning from business activities, you should choose other ITR forms, but you can switch to the old regime using Form No. 10-IEA before the due date for filing the income tax return which is usually July 31 of any FY. Once the old tax regime is chosen, such business income earners have only a one-time opportunity to revert to the new tax regime. From then they won't be able to select the old tax regime again. Note that tax-saving investments and expenditures that are completed by March 31, 2024, can also be availed as a deduction even if you shift from the new to the old tax regime. Even though details and proofs of deductions aren't provided to your employer, these benefits can be claimed at the time of filing ITR. Proofs of deductions should be kept for future reference if demanded by the income tax department.
