So, unless details with all four sources – the CPC, Form 16, Form 26 AS and Annual Information Statement – match, processing the returns would be tedious,” said Patel. “The Central Processing Centre (CPC) would reconcile the salary details mentioned in the AIS. Technically, nothing prevents individuals from selecting the tax regime at the return-filing stage. “You cannot claim LTA (leave travel allowance) as the employer needs the details,” said Patel. Not all deductions offered under the old tax regime can be claimed. If the numbers in Form 16 do not match the details of salary and tax deductions mentioned in the return, there would be a mismatch in the AIS (annual information statement) records too,” said Ameet Patel, a partner at Manohar Chowdhry & Associates. “Detailed break-up of Form 16 is needed for the income tax return forms. If you try to switch to the new regime at the return-filing stage, the Form 16 break-up will not be accurate and could create a major calculation complication. This translates into a shorter Form 16 as details of tax-saving investments and deductions are not needed. The employer then deducts taxes accordingly – a lower percentage for the new regime with hardly any tax-saving investments. This is because one needs to inform the employer at the start of the financial year about the tax regime you will follow. Yet, switching the tax regime at the time of filing returns is a cumbersome task. If an individual is able to save tax, then there is no harm in changing the tax regime,” said Sudhir Kaushik, co-founder of .Īlso read: New vs old tax regimes: There is still time to weigh and choose the I-T regime that suits you “Before filing tax returns, we check the tax outgo for each individual under both regimes. Even investments in provident funds, tax-saving fixed deposits or tax-saving mutual funds can help you claim exemptions. If you realise at the tax-filing stage that the old regime is more tax-friendly, you can still claim the deductions provided you incurred expenses on rent, loan instalments, health insurance, medical treatment of disabled people or fighting select diseases. There are 70 types of expenses and investments that are disallowed as deductions and exemptions if you select the new tax regime, which offers a lower tax rate in return for simplicity of compliance. The lower rates come at the cost of giving up deductions and benefits that help you reduce tax. These tax brackets don’t exist in the old tax regime.Īlso read: Moneycontrol's income tax return-filing guide Under the new tax regime, a lower tax rate of 10 percent (Rs 5-7.5 lakh annual income) and 15 percent (Rs 7.5-10 lakh annual income) is levied.
Alternatively, you can ask a chartered accountant to examine your income, savings and spending pattern to help you select the correct regime. But those who run businesses or are self-employed can switch only once during their lifetime.Ī calculator is available on the income tax portal to weigh your options. If you are a salaried individual, you can alter the tax regime while filing returns. Picture this: You are filing your tax returns and you realise that you can pay less tax if you choose the old tax regime instead of the new regime, or vice versa.
0 kommentar(er)
