Old to New Tax System: Learn how to convert your taxes from the old to the new system

Old to New Tax System: Learn how to convert your taxes from the old to the new system

Old to New Tax System: Learn how to convert your taxes from the old to the new system

Old to New Tax System: The budget for the next fiscal year 2023–2024 includes a significant adjustment to the income tax slab rate. Income up to Rs 3 lakh is exempt from taxation under the new tax regime. In addition, the tax exemption level has been raised to Rs 7 lakh, meaning that no tax will now be due on income up to this amount.

Old to new tax regime: In the budget for the next fiscal year 2023–2024, Union Finance Minister Nirmala Sitharaman proposed significant adjustments to the income tax bracket rate. Income up to Rs 3 lakh is tax-free under the new tax structure. In addition, the tax exemption level has been raised from Rs 5 lakh to Rs 7 lakh, meaning that income up to Rs 5 lakh was previously free from paying taxes. Finance Minister Sitharaman claims that the new tax structure is simpler and better. The challenge now is how to switch to the new tax system if you have selected the old one.

How can the old tax system be changed to the new one?

Generally, the choice between the old and new tax systems is made at the start of the fiscal year. Nonetheless, individuals may make the switch while filing their income tax return if they choose the previous tax system but now see advantages in the new one. Form 10-IE should be filed if a taxpayer has both business and salary income, advises Archit Gupta, founder and CEO of Clear, a company that helps with tax filing. Filing this form indicates that the taxpayer has either chosen to opt for the new tax system or has not opted.

Gupta says that in order to join or leave the new tax regime, a taxpayer with profits from a business or profession must submit Form 10-IE. On the other hand, if you do not have any income from a business or profession, you may choose the new tax regime while completing Form ITR-1 or Form ITR-2.

which form to choose

Sujit Bangar, the founder of Tax Buddy, an additional platform that helps with tax filing, states that revenue from salaried workers' business activities falls under Salaries and Profits and Gains from Business and Profession (PGBP). PGBP is an acronym for profits from several sources such as share trading, foreign exchange, commodities or commodity derivatives, freelancing, YouTube or other content publishing platforms, etc.

Bangar states that a taxpayer should report both business and salary income under separate headings, such as PGBP and salary income, if they have both. The total income will be calculated by adding these two. These taxpayers must report both business and salary income and file forms ITR-3 and ITR-4.