Business taxpayers must file Form 10-IEA to opt out of new tax regime

Taxpayers with business or professional income cannot simply tick a box to opt out of the default new tax regime. They must also furnish Form 10-IEA within the prescribed deadline, or the income tax department will process the return under the default regime, potentially triggering a demand even if total income is below Rs 12 lakh, Livemint reports.

The new tax regime is the default. Individuals with only salary, interest or other non-business income can switch regimes each year by selecting the appropriate box. But those earning business or professional income face stricter rules: they cannot move freely between regimes year after year and get only one chance to return to the new regime after opting for the old one.

Livemint cites a case where a taxpayer with income of Rs 11,75,590 selected the old regime but did not file Form 10-IEA. The department processed the return under the new regime and issued a tax demand of Rs 1,82,740. The taxpayer rectified the position before the August 31 deadline. Tax experts advise evaluating tax positions over several years, not just the current year.