Query on Tax regime

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An individual submitted documents for the old tax regime but later found the new tax regime resulted in a lower tax liability. They are seeking guidance on whether they can file their Income Tax Return (ITR) under the new regime, especially with business income. The expert confirms they can opt for the new regime but warns that switching back to the old regime in subsequent years may be restricted if they continue to have business or professional income, citing a proviso to section 115BAC(5).

Deepak Rawat

Deepak Rawat (Querist)

26 July 2021 Dear Expert,
I had submitted all documents to claim deduction u/s 80C to my employer and my employer has deducted TDS as per old Tax Regime.
But, now I calculated my Tax as per New Tax Regime, where I have lesser tax liability in comparison of old Tax Regime. I have income from business and profession u/s 44AD also.
Please guide, can i file ITR as per New Tax Regime ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 July 2021 Yes, you can file ITR as per new tax regime.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

27 July 2021 Yes, you may opt for new regime. But since you have professional income, after opting in (at present), once you opt out (in subsequent years), you will not be able to opt in subsequently till you don't have any more professional/business income.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 July 2021 You will not be able to opt in subsequently till you don't have any more professional/business income.
Please give me any such clause in the Act/ Rules.

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

27 July 2021 @CA R Seetharaman
Is the above reply addressed to me?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

27 July 2021 Yes, to you only.........

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

27 July 2021 Refer proviso to section 115BAC(5)

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