New Compliance which has to be done for New Tax regime before filing ITR

Last Updated On: Oct. 8, 2020, 11:57 p.m.
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NEW COMPLIANCE ON NEW TAX REGIME

New Tax Regime was brought by the Finance Act with the lower rate of tax which was mainly introduced for Individual, HUF, and Co-operative Societies.

Central Board of Direct Tax (CBDT) has issued a notification regarding the compliance requirement to opt for this new tax regime.

 

The Tax Rate as per New Tax Regime are as under:

Total Income Rate of tax
Upto Rs. 2,50,000 Nil
From Rs. 2,50,001 to Rs. 5,00,000 5%
From Rs. 5,00,001 to Rs. 7,50,000 10%
From Rs. 7,50,001 to Rs. 10,00,000 15%
From Rs. 10,00,001 to Rs. 12,50,000 20%
From Rs. 12,50,001 to Rs. 15,00,000 25%
Above Rs. 15,00,000 30%

 

 

Section 115BAC: New Tax Rate for the income of individuals and Hindu undivided family (HUF).

As per this section, the Individual and HUF have an option to opt for this new tax regime but will not be able to avail these allowance or deductions which are mentioned below:

  • Standard deduction of Salaried people
  • Leave Travel Allowance (LTA)
  • House Rent Allowance (HRA)
  • Children education allowance
  • Other special allowances [Section10(14)]
  • Deduction from family pension income
  • Interest on housing loan on the self-occupied property or vacant property (Section 24)
  • Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJAA)
  • Exemption or deduction for any other perquisites or allowances
  • Without setting off any loss carried forward or unabsorbed depreciation of earlier year
  • No Additional Depreciation u/s 32(2) allowed

       

Section 115BAD: New Tax Rate for Co-operative Society

As per this section, the Co-operative Society have an option to opt for a new tax regime under which the tax will be charged at the rate 0f 22% in the place of the existing tax rate of 30% but  will not be able to avail these allowance or deductions which are mentioned below:

  • Deduction u/s 10AA or 32(1)(iia) or 33AB or 33ABA or 35AD
  • Deduction for Investment allowance u/s 32AD
  • Chapter VI-A deduction (80C,80D, 80E and so on) (Except 80JJAA)
  • Exemption or deduction for any other perquisites or allowances
  • Without setting off any loss carried forward or unabsorbed depreciation of earlier year
  • No Additional Depreciation u/s 32(2) allowed

 

New Compliance Requirement for section 115BAC and 115 BAD:

CBDT vide Notification 82/2020 dated 01 October 2020 has inserted two new forms as mandatory compliance before opting for this new tax regime.

1. FORM No. 10-IE – Application for exercise/ withdrawal of option under clause (i) of sub-section (5) of section 115BAC of the Income-tax Act, 1961

As per Section 115BAC, an individual or HUF having business income shall submit this form on or before the due date of filing ITR.

And for all other individuals or HUF, the form can be submitted along with ITR filing.

As per Section 115BAD, the co-operative society shall submit this form on or before the due date of filing ITR.

 

2. FORM No. 10-IF- Application for the exercise of option under sub-section (5) of section 115BAD of the Income-tax Act, 1961.

This form has to be mandatorily filed by the Individual or HUF or Co-operative society just to inform the government that they are opting for a new tax regime.

Furnishing of Form 10-IE and 10-IF:

The option in Form No. 10-IE and Form No. 10-IF shall be furnished electronically either under digital signature or electronic verification

The Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems), as the case may be, shall, –

(i) specify the procedure for filing of Form No. 10-IE and Form No. 10-IF

(ii) specify the data structure, standards, and manner of generation of electronic verification code, referred to in sub-rule (2), for verification of the person furnishing the said Form; and

(iii) be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the Form

 

Details required in Form 10-IE:

  • Name of the individual/HUF
  • Address
  • PAN
  • If the individual/HUF has income under business or profession
  • Date of birth
  • Nature of business/profession, (mandatory if an individual is having income from business and profession)
  • Whether the individual/ HUF has any Unit in International Financial Services Centre (IFSC), as referred to in section 80LA(1A), and if the answer is affirmative then provide details of the unit such as name, address, and nature of activities undertaken
  • Whether option under clause section 115BAC(5)(i) has been exercised in Form 10-IE for any earlier previous year/ years? If yes, the previous year in which the option was exercised and the Date on which option exercised

Details required in Form 10-IF:

  • Name of the Co-Operative Society
  • Whether Co-Operative Society is Resident or not?
  • Registered Address
  • PAN
  • Date of Incorporation
  • Nature of Activities

Whether the Co-Operative Society has any Unit in International Financial Services Centre (IFSC), as referred to in section 80LA(1A), and if the answer is affirmative then provide details of the unit such as name, address, and nature of activities undertaken

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