CBDT amends rules in relation to new default tax regime and introduces form no. 10-IEA for opting the old tax regime

Vide Finance Act, 2023, sub-section (lA) has been inserted in section 115BAC of the Income-tax Act, 1961 (the Act) to provide for a new tax regime, which is a default tax regime, with effect from the assessment year beginning on or after the 1st day of April, 2024. This regime applies to an individual or Hindu undivided family or association of persons [other than a cooperative society] or body of individuals, whether incorporated or not, or an artificial juridical person. In case the specified person opts for old tax regime he/she can do so by following the instructions provided in this notification.

Name of the Circular/Update : CBDT amends rules in relation to new default tax regime and introduces form no. 10-IEA for opting the old tax regime

Date : June 21, 2023

Circular / Update Number : Notification No. 43-2023

Link for the Circular /Update : https://incometaxindia.gov.in/communications/notification/notification-43-2023.pdf

 Full Provision :

Amendment to rule 2BB–  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 claim exemption such as allowance granted to meet the cost of travel on tour/transfer, to meet ordinary daily charges on living on account of absence from normal place of duty, conveyance allowance in performance of duties and transport allowance granted to employees with disability, etc.

Amendment to Rule 3 – An employess who is an assesse shall not be allowed to claim exemption in respect of free food and non-alcoholic beverage provided by the employer through paid voucher

Amendment to Rule 5– Depreciation allowance shall not exceed 40% for any block of assets in case of specified taxpayers who have opted for concessional tax regime or new tax regime.

Further where income is chargeable to tax under section 115BAC(1A), the WDV of the block of asset as on April 01, 2023 shall be increased by such depreciation which is attributable to section 32(1)(iia) and which is not allowed to be set off under section 115BAC, if both the following conditions are satisfied, namely: –

(i) the assessee has not exercised option under section 115BAC(5) for any previous year relevant to the assessment year beginning on or before the April 01, 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 section 32(1)(iia).

Insertion of Rule 21AGA–

• In case of specified assessee having income from business or profession, Form No. 10-IEA is to be filed on or before the due date of filing return of income for opting the old tax regime.
• In case of specified assesse not having income from business or profession, opting for the old tax regime, can do so while filing the return of income. Form No. 10-IEA is not required to be filed in such case.
• For opting out of old tax regime also Form No. 10-IEA has to be filled.
• Form No. 10-IEA shall be furnished electronically either under digital signature or electronic verification code.
• The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall specify the procedure for furnishing of Form No. 10-IEA, data structure, manner of generating EVC, etc.
• The complete format of Form 10-IEA can be found at https://incometaxindia.gov.in/communications/notification/notification-43-2023.pdf