CA (CS) Ujjwal Jindal
Quick Summary
India is the second-most populous country; seventh-largest country by area and the most colossal democracy in the world. To run such a cosmic nation, the government requires a lot of resources. Such resources are collected in form of taxes, the primary aim of which is to fund the governance of the n
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FAQ :
The new income tax regime, introduced by the Finance Act, 2020, offers an alternative way to compute income tax for individuals and HUFs with different tax slab rates. It is optional and can be chosen by the taxpayer.
The new tax regime features lower tax rates but requires taxpayers to forgo most deductions and exemptions, such as House Rent Allowance (HRA) and standard deduction. The old regime allows for these deductions and exemptions.
Yes, individuals and HUFs with income from business or profession can opt for the new tax regime, but they must forgo specific deductions and exemptions related to business, including certain depreciation benefits.
For individuals and HUFs without business income, the option can be exercised while filing the income tax return (ITR) for the relevant financial year. For those with business income, the option must be exercised by the due date for furnishing the ITR.
The new tax regime is generally more beneficial for individuals who claim fewer deductions and exemptions. Those who utilise significant deductions may find the old regime more advantageous. It's essential to compare your tax liability under both systems.
The new tax regime is optional for each financial year, meaning individuals and HUFs without business income can choose to opt in or out annually based on what is most beneficial. For those with business income, the rules for switching are more restrictive.
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