The deadline for filing income tax returns has been extended to September 15, giving taxpayers additional time to evaluate whether to opt for the old or new tax regime. Salaried individuals and pensioners without business income can switch between regimes annually by selecting the appropriate option on the ITR-1 or ITR-2 form. However, those with commercial or professional income face stricter rules, as they may revert to the old regime only once in their lifetime. This change must be declared by filing Form 10-IEA before the deadline, failing which the new regime will apply by default.
The old regime allows deductions under Sections 80C to 80U, including House Rent Allowance, Leave Travel Allowance, and home loan interest under Section 24(b). These benefits are not available under the new regime, which offers fewer deductions but provides a full tax rebate for individuals with taxable income up to Rs 1.2 million. For income above Rs 1.2 million, the new regime applies slab-wise taxation: zero tax for the first Rs 400,000, 5 percent on Rs 400,000 to Rs 800,000, 10 percent on Rs 800,000 to Rs 1.2 million, and 15 percent on Rs 1.2 million to Rs 1.6 million, with higher rates for subsequent slabs.
The new regime permits limited benefits under Sections 80CCD(2) and 80CCH(2), excluding the broader 80C basket that is popular among salaried taxpayers. Taxpayers are advised to consider their income, pay structure, and eligible deductions before choosing a regime. Those with minimal deductions may benefit from the new regime, while individuals eligible for substantial claims under Sections 80C, 80D, HRA, or home loan interest may find the old regime more advantageous.
Losses from house property, capital gains, or business income cannot be carried forward under the new regime, which may impact future tax liabilities. Tax experts suggest that the old regime is generally beneficial only for those who can claim Rs 200,000 in home loan interest deductions or a large HRA component. For most other taxpayers, the new regime may offer greater simplicity and comparable tax savings.
