A significant procedural change for individual taxpayers, HUFs, and AOPs has been implemented for the Financial Year 2024-25 (Assessment Year 2025-26): the New Tax Regime under Section 115BAC is now the default system.
Understanding the Change
- Default Regime: If a taxpayer does not make an explicit choice, the ITR will be processed under the New Tax Regime's slab rates.
- Old Regime Option: Taxpayers can still opt for the Old Regime which allows various deductions and exemptions (HRA, LTA, Section 80C, etc.).
- How to Opt Out: To switch to the Old Regime, the taxpayer must explicitly select this option while filing their ITR (and sometimes via Form 10IEA for business income).
Which Regime to Choose?
The New Regime generally offers lower tax rates but fewer deductions. The Old Regime may be beneficial for individuals with significant investments and eligible deductions. Consult a Chartered Accountant to determine the optimal regime based on individual circumstances.
Disclaimer: This article is for general information only. For
personalised advice, consult a qualified CA.