The Finance Minister, Nirmala Sitharaman presented the Budget 2020 on the 1st of February 2020. The introduction of the new tax regime took place in the previous budget. This regime is available only to individuals and HUF where they need to opt by using Form 10IE.
Under the new tax regime, taxpayers can pay less tax on their total income with reduced tax rates. Also, taxpayers cannot claim the deductions and tax benefits otherwise available in the old tax regime.
The taxpayer has to make his/her choice before filing the Income Tax Return (ITR) of the relevant Financial Year (FY). Taxpayers also need to communicate the selection to the Income Tax Department before filing the ITR.
How to inform the IT Department which tax regime is selected?
The Central Board of Direct Taxes (CBDT) has released Form 10IE. Any person who wishes to pay income tax as per the new tax regime has to communicate his/her choice to the Income Tax Department through form 10IE.
In case a taxpayer wants to opt out of the new tax regime, the same form 10IE needs to be submitted before filing the income tax returns for the relevant Financial Year (FY).
Switching between Old Tax Regime & New Tax Regime
- Business Income
- Individuals having business income are not eligible to choose between the new and old tax regimes every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime. Once they switch back, they cannot opt for a new tax regime again.
- Essentially, people with business income may have to fill Form 10IE twice – once to use the new tax regime and the second time to switch back to the old regime.
- No Business Income
- An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year. In case the individual does not have a business or professional income, they do not have to file Form 10IE. Instead, they can just select the option under 115BAC while filing the ITR 1 or 2.
When to submit Form 10IE?
As per the income tax laws, an individual having business income shall submit this form before the due date of filing ITR i.e. July 31 (unless extended by the government). For salaried individuals, they can submit the form before/at the time of ITR filing.
How to File Form 10IE?
- Log in to the income tax portal
Login to the portal using valid credentials and navigate to e-File > Income Tax Forms > File Income Tax Forms
- Form 10IE option
Taxpayers will be able to find the form 10IE option under the Persons with Business / Profession Income tab.
- File Form 10IE Process
Click on the option to File Now. On the next screen, select the relevant assessment year and click on continue.
- Preview Page
Provide the details for the 4 sections mentioned on the application page.
- Assessing Officer
The information on this page will be prefilled. Verify the details in case of any error and click on confirm.
- Basic Information
Personal details such as name, PAN, date of birth and address are prefilled from the profile page. Verify such details. Select the appropriate option under the nature of business or profession tab (if any) and save these changes.
- Additional Information
Select yes if the taxpayer has any unit in the IFSC. If yes, you will view a drop-down where you will have to enter additional details such as: name of unit, address of unit and nature of business or activities. Once done, save these details.
- Verification Stage
The final step of filing the Form 10IE is the verification stage. Review the information presented on this screen and click on the option to save this information.
- Preview
Finally, preview all of these details and proceed to e-verify these details to complete the filing o this form. You can also download this preview page for your reference.
- e-Verify Form 10IE
Select from any of the options provided to e verify the form 10IE to complete the process. On completion, you will receive the acknowledgement number which you shall require while filing your ITR.
Contents of Form 10IE
Given below are the basic details that we need to enter in form 10IE:
- Name of the individual/HUF
- Confirmation – Whether the individual/HUF has any income under the head profit or gains from business or profession
- PAN
- Address
- Date of Birth/Incorporation (in dd/mm/YYYY format)
- Nature of Business/Profession
- Confirmation – If a taxpayer has any unit in the International Financial Services Centre (IFSC), as referred to in sub-section (1A) of section 80LA. (if yes, the details have to be provided)
- Details of the previous form 10IE filed (If applicable)
- Declaration
E-filing the Form 10IE
The notification has given the clarification that the taxpayer needs to file the form electronically. Taxpayers can file the form on the IT Portal to opt for the new tax regime for FY 2020-21 onwards. The form will be filed using either a digital signature certificate or an electronic verification code.
FAQs
If an individual who has opted for the old tax regime with his/her employer for TDS on salary, plans to opt new tax regime at the time of filing ITR, then he/she can do that by filling the new form i.e. 10IE.”
If an individual forgets to fill the new form i.e. Form 10IE, at the time of filing ITR, then he/she may be disallowed the tax rates available under the new tax regime. The tax department will calculate his/her income tax liability based on the existing/old tax regime.
This form shall be signed by the individual/Karta of the HUF/Authorized Representative only.
Hey @TeamQuicko
Thanks for the blog! Just one quick question - Why do we have to report a quarterly breakdown of Dividend Income under IFOS?
Thank you!
Hey @TanyaChopra
This quarterly breakdown of Dividend Income under IFOS will help to calculate and determine penalty u/s 234C for the delay in payment of Advance Tax.
Hope this helps!
I had received dividend recently but I had noticed that TDS had been deducted. any idea as to why has it happened and is there a way I can claim this TDS?
Hey @HarshitShah
After the introduction of Budget 2020, dividend income is now taxable in the hands of the shareholder; and is also subject to TDS at 10% in excess of INR 5000 u/s 194 & 194K. Foreign Dividend is taxable at slab rates. TDS is not applicable to such dividends. The taxpayer should report such income under the head IFOS in the ITR filed on the Income Tax Website.
Hope this helps!
Hey @HarishMehta
Yes, dividend income is now taxable from FY 2021-22 onwards and it has to be reported under the head of IFOS.
You can read more about it here:
Hi @Maulik_Padh,
You need to pay Income tax on the net taxable income, i.e. after subtracting deductions, expenses, etc.
If the net taxable income is negative i.e. if there is loss, you can carry it forward when filing the ITR
Here are some of the articles which might help
Hi @ameyj
The amount of TDS deducted shall reflect in your Form 26AS only and it will also reflect the name of the deductor.
Using the name of the deductor you can find out on which share you have received the dividend and you can also cross-check the same in your bank statement.
Yes, you are right, TDS is to be deducted when the dividend paid exceeds 5000 INR in a financial year. However, the 5,000 INR limit pertains to all the dividends an individual gets in a year, or the total dividend per shareholder that a company pays out in a year, is left to interpretation, and hence registrars and share transfer agents (RTA) are not taking any chances and are deducting TDS even on small amounts.
Hope this helps
Hi @ameyj
You can submit a grievance on Income Tax Portal mentioning the issue and also attach the 26AS.
The other option is to leave it as it is and clarify it when the tax department sends the notice.
Hi @TeamQuicko
Consider that I have 10 shares each of 10 different Indian companies. Each of the 10 companies are declaring a dividend of INR 100 before the FY ends. Now I will be recieving 1000 as dividend from each company, thereby a total of 10,000.
The 5,000 dividend limit, is it applicable to each company / total dividend recieved by me in a year. If it is applicable to each company, then I would not attract TDS of 10% for dividend.
Also pl clarify, how would the company B know that I have got shares of Company A,C,D,E so on…
@Saad_C @Laxmi_Navlani @Divya_Singhvi @Kaushal_Soni @AkashJhaveri can you help with this?