60 million file ITR for 2024 under new tax regime: What you need to know

Today, July 31, 2024, is the final day to file your income tax return for the financial year 2023-24. So far, around 60 million people have filed their returns for income earned last year. According to Revenue Secretary Sanjay Malhotra, 70% of these filings were under the new tax regime.

What are the options for filing ITR?

India currently offers two personal income tax regimes: the old and the new. The old regime has higher tax rates but allows for numerous exemptions and deductions. The new regime, on the other hand, features lower tax rates but permits fewer deductions. This shift towards the new regime aims to simplify the tax system and reduce the compliance burden, as Malhotra explained, “The whole move has been towards simplicity with the ultimate purpose being to reduce the compliance burden."

 

How do you choose the right ITR form?

Choosing the right form depends on several factors, including your income and the deductions you can claim. To determine which regime suits you best, calculate your tax liability using tools like the Bank Bazaar Income Tax Calculator. This tool considers your income, deductions, and exemptions to provide an estimate under both regimes.

How to use the Bank Bazaar Income Tax calculator?

1. Select the 'Assessment Year': Choose the year for which you want to calculate taxes.

2. Enter Personal Details: Select your gender.

3. Provide Income Information: Include details such as gross annual income, income from other sources, rental income, and interest from home loans.

4. Input Deduction Details: Fill in deductions under sections like 80C, 80TTA, 80G, 80D, and others.

5. Specify HRA Exemption: If applicable, enter your house rent allowance exemption.

6. Indicate Metro City Residence: Select whether you live in a metro city.

7. Calculate: Click 'Calculate' to view your tax liability under both the old and new tax regimes.

Once you know your tax liability, you can decide which regime suits you better. Chartered Accountant Akshat Rastogi advises, "It really depends on the amount of deductions from gross total income that you can claim to reduce your taxable income. If you know your gross total income and the minimum amount of deductions at which you would pay the same tax under both regimes, then you would be able to choose easily."

Here are the slabs for the old regime:

Up to Rs 2.5 lakh: Nil

Rs 2,50,001 to Rs 5 lakh: 5%

Rs 5,00,001 to Rs 10 lakh: 20%

Above Rs 10 lakh: 30%

New tax regime slabs (before Budget 2024)

Up to Rs 3 lakh: Nil

Rs 3 lakh to Rs 6 lakh: 5%

Rs 6 lakh to Rs 9 lakh: 10%

Rs 9 lakh to Rs 12 lakh: 15%

Rs 12 lakh to Rs 15 lakh: 20%

Why is it important to file ITR on time?

Filing your income tax return on time is not just a legal obligation; it's crucial for your financial health. As Bank Bazaar CEO Adhil Shetty points out, "Taxpayers must remember that filing your ITR on time is not just a legal obligation but also a crucial aspect of maintaining financial health and compliance. The consequences of not filing can impact your financial records."

Whether you opt for the new regime or the old, the important thing to remember is to file your ITR on time.

Here's why it's important:

1. Getting loans

"When you apply for loans, whether for a house, a car, or medical treatment, banks and financial institutions often require the past three years' tax returns. It helps them assess your creditworthiness and income stability," explains Akshat Rastogi, a chartered accountant.
 

2. Visa approvals

For international travel, certain countries like Australia, the UK, the USA, and Canada require your tax returns as part of the visa application process. It serves as proof of your financial standing.

3. High-value transactions

If you're involved in significant transactions, like transferring assets abroad, you might need a tax clearance certificate. This certificate, which includes your ITR, assures authorities that your tax obligations are up-to-date.

4. Tax refunds

If you've paid more tax than you owe, filing an ITR is the only way to claim a refund. Without filing, any excess tax paid remains with the government.

5. Proof of income and address

Your tax return documents are essential proof of your income and address. They offer a detailed account of your earnings, making them more reliable than Form 16 alone.

6. Eligibility for government tenders

If you're aiming to take on government projects, regular filing of ITRs can make you eligible for tender applications, demonstrating your financial health and compliance.

7. Penalties and interest

Filing your ITR on time helps you avoid penalties and interest charges, which can accumulate if you miss the deadlines.