As announced in during the presentation of Budget, 2023, the new regime of tax under section 115BAC shall be the default scheme for everyone from AY 2024-25. Accordingly, Income tax department has introduced a Form for people who wish to opt out or re-enter the scheme of new tax regime. Please note that since the new regime will be the default tax regime there is no provision for entering into new tax regime as was required earlier by Form 10-IE.
Now assessee will have to file Form 10-IEA to either opt out of new tax regime or re-enter new tax regime.
Also, there is no clarification as to what will happen if one had already opt in for new tax regime i.e. filed Form 10-IE earlier and then opted out of new regime so will he be again taken in new regime in FY 2023-24 because as per the earlier provision if a person carrying on business has once opted out of new regime he can only enter once again in new regime. Now from FY 2023-24 one would be by default in new regime so will they be allowed to opt out of new regime or not?
The new Form has been brought in by notification no. 43 of 2023 Dt. 21.06.2023 and will be applicable for AY 2024-25. Relevant extract of the notification is as under:
Short title and commencement.—(1) These rules may be called the Income-tax (Tenth Amendment) Rules, 2023.
(2) Save as otherwise provided in these rules, they shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereafter referred to as the principal rules),—
(a) in rule 2BB, for sub-rule (3), the following sub-rule shall be substituted, namely:-
“(3) Notwithstanding anything contained in sub-rule (1) and (2), an employee, being an assessee, –
(i) who has exercised option under sub-section (5) of section 115BAC; or
(ii) whose income is chargeable to tax under sub-section (1A) of section 115BAC,
shall be entitled to exemption only in respect of the allowances mentioned in sub-clauses (a) to (c) of sub-rule (1) and at serial no. 11 of the Table below sub-rule (2) to the extent and subject to the conditions, if any, specified therein.”;
(b) in rule 3, in sub-rule (7), in clause (iii), for the second proviso, the following proviso shall be substituted, namely:-
“Provided further that the provisions of the first proviso in respect of free food and non-alcoholic beverage provided by the employer through paid voucher shall not apply to an employee, being an assessee, who has exercised an option under sub-section (5) of section 115BAC or whose income is chargeable to tax under sub-section (1A) of section 115BAC.”;
(c) in rule 5, in sub-rule (1) –
(a) for the first proviso, the following proviso shall be substituted, namely: –
“Provided that the allowance under clause (ii) of sub-section (1) of section 32 in respect of depreciation of any block of assets shall not exceed forty per cent. of the written down value of such block of assets in case of –
(i) a domestic company which has exercised option under sub-section (4) of section 115BA, or under sub-section (5) of section 115BAA, or under sub-section (7) of section 115BAB; or
(ii) an individual or a Hindu undivided family which has exercised option under sub-section (5) of section 115BAC; or
(iia) an individual or a Hindu undivided family, or an association of persons (other than a co-operative society) or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 whose income is chargeable to tax under sub-section (1A) of section 115BAC; or
(iii) a co-operative society resident in India which has exercised option under subsection (5) of section 115BAD; or
(iv) a co-operative society resident in India which has exercised option under subsection (5) of section 115BAE:”;
(b) in the third proviso, for the words, figures and letters “for the purposes of section 115BAC”, the words, figures, letters and brackets “for the purposes of section 115BAC [as it stood immediately before its amendment by the Finance Act, 2023]” shall be substituted;
(c) after the third proviso, the following proviso shall be inserted, namely:-
“Provided also that, where income is chargeable to tax under sub-section (1A) of section 115BAC, the written down value of the block of asset as on the 1st day of April, 2023 shall be increased by such depreciation which is attributable to clause
(iia) of sub-section (1) of section 32 and which is not allowed to be set off under sub-clause (a) of clause (ii) of sub-section (2) of section 115BAC if both the following conditions are satisfied, namely: –
(i) the assessee has not exercised option under sub-section (5) for any previous year relevant to the assessment year beginning on or before the 1st day of April, 2023; and
(ii) there is a depreciation allowance in respect of a block of assets which has not been given full effect to prior to the assessment year beginning on the
1st day of April, 2024, and is attributable to the provisions of clause (iia) of sub-section (1) of section 32.”;
(d) after rule 21AG, the following rule shall be inserted, namely:-
“21AGA. Exercise of option under sub-section (6) of section 115BAC.-(1) The option to be exercised in accordance with the provisions of sub-section (6) of section 115BAC by a person, being an individual or Hindu undivided family, or an association of persons (other than a co-operative society) or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be, –
(a) in Form No. 10-IEA on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for such assessment year, in the case of a person having income from business or profession;
(b) in the return of income to be furnished under sub-section (1) of section 139 for such assessment year, in the case of a person not having income from business or profession as referred to in clause (i).
(2) The withdrawal of option under the proviso to sub-section (6) of section 115BAC shall also be in Form No. 10-IEA
(3) Form No. 10-IEA shall be furnished electronically either under digital signature or electronic verification code.
(4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall, –
(a) specify the procedure for furnishing of Form No. 10-IEA;
(b) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule (3), for verification of the person furnishing the said Form; and
(c) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the Form so furnished.
Explanation.—For the purposes of this rule “electronic verification code” means a code generated for the purpose of electronic verification of the person furnishing the Form as per the data structure and standards specified by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) as the case may be.”
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