The Central Board of Direct Taxes (CBDT) has released new rules for consultants and professionals who wish to continue with the old tax regime starting from the financial year 2023-24. Previously, the new tax regime had become the default option, but now individuals with business income have the choice to opt for the old tax regime. This change requires filling out a new form called Form 10-IEA.
The CBDT notification, issued on June 21, 2023, outlines the procedure for consultants and professionals to follow if they want to stick with the old tax regime. They can fill out Form 10-IEA, which allows them to continue under the old tax regime and claim eligible tax exemptions and deductions.
It's worth noting that the new tax regime will automatically apply to incomes earned during the current financial year (April 1, 2023, to March 31, 2024). However, individuals have the option to choose the old tax regime.
Unlike salaried individuals who can switch between tax regimes, consultants and professionals can only make this decision once. Once they opt for the new tax regime, they cannot revert to the old tax regime. This is a one-time choice.
To continue with the old tax regime, eligible taxpayers with business or professional income need to submit Form 10-IEA before the due date for filing their income tax returns (usually July 31 or October 31). On the other hand, salaried taxpayers without business income can directly choose the old tax regime when filing their returns.
If individuals want to withdraw from the default new tax regime in the financial year 2023-24, they must also submit Form 10-IEA.
Form 10-IEA requires individuals to provide their name, PAN (Permanent Account Number), assessment year, and their status (such as individuals or HUF). They need to indicate whether they are opting out of the default new tax regime or re-entering it. If they choose to re-enter, they must provide details of when they previously opted out.
The form should be verified at the time of submission through a digital signature or an electronic verification code, which are methods used to verify income tax returns.
Previously, until the financial year 2022-23, individuals with business income who wanted to opt for the new tax regime were required to submit Form 10IE. However, this form has been withdrawn since the new tax regime has become the default option starting from the current financial year, 2023-24.
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The author is a Chartered Accountant with 2 decades of experience into Accounting, Taxation, Auditing, Risk & Compliance, Credit Controls, Due diligence. Currently, the author is the founder and managing partner at RRL Global services.
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