Can You Switch Between Tax Regime While Belated Income Tax Returns?

The last date for filing your Income Tax Return (ITR) for the financial year 2022-23 (AY 2023-24) was July 31st, 2023. If you missed this deadline, there is no need to worry. You are still able to file your tax returns but with a penalty. 

Filing income tax returns after the last date has gone is called a belated return. In simple terms, when you file your ITR after the original deadline, it is considered a "belated" tax return. The last date to file your income tax returns was 31st July 2023 for FY 202-23.

If you have missed the deadline then filing belated tax returns is only the option left for you. To file a belated tax return, you will be required to pay a penalty. 

Penalties for filing your belated tax returns are as follows:

If your net taxable income is over Rs 5 lakh, the penalty is Rs 5,000. If your net taxable income is below Rs 5 lakh, the penalty is Rs 1,000. Additionally, if there is any income tax due, you will also need to pay a penalty.

Filing a belated ITR is not so much different from the original ITR filing process. However, belated tax return filing comes with minor differences. 

Talking about switching the tax regime while filing a belated ITR is a different matter as compared to the original ITR and switching the tax regime depends on the source of income. 

Can people who earn a salary choose the new tax system for the 2022-23 financial year when filing a belated ITR? 

"If an individual receives income from salary, house property, or other sources, but does not earn any income from a business or profession during the 2022-23 financial year, they can select the new tax regime for that year (AY 2023-24) by submitting their ITR before the original deadline of July 31, 2023," explains Ankit Jain, a partner at Ved Jain and Associates, a CA firm in Delhi.

"However, if you are filing a belated return u/s 139(4) for the 2022-23 FY (AYr 2023-24), you can not go with the new tax regime.

Selecting The New Tax Regime When Filing Belated ITR

Individuals with business or professional income for the 2022-23 financial year (Assessment Year 2023-24) can switch to the new tax regime. To do this, they need to submit Form 10-IE before the original due date for filing their income tax return under section 139(1)," explains Amarpal S. Chadha, Tax Partner and Mobility Leader at EY India, a consultancy company.

If you want to opt for the new tax regime then exercising form 10-IE within the original due date is to be done. The option for the new tax regime can be chosen in the original ITR under section 139(1) or in a belated return under section 139(4)," adds Chadha.

According to Chartered Accountant Manas Chugh, head of regulatory services at Osgan Consultants, a tax and business consultancy firm based in Delhi, "Once Form 10-IE is filed, it remains applicable for subsequent years unless another Form 10-IE is submitted to withdraw the regime change consent. 

So, if an individual submitted Form 10-IE by the original ITR due date for the 2021-22 financial year to choose the new tax regime, they can continue filing ITR (original or belated) under the new tax regime for the 2022-23 financial year (Assessment Year 2023-24).

The deadline for ITR filing is July 31, 2023, for those not required to undergo an income tax audit. For those needing an audit, the ITR deadline is extended to October 31, 2023.

Who Can Choose the New Tax Regime in a Belated ITR for AY 2023-24?

Individuals who earn income from business or profession have the option to switch to or from the new tax regime. This choice can be exercised by informing the income tax department through the submission of Form 10-IE.

Changing tax systems is a one-time opportunity for business individuals. 

Those with income from business or profession can switch tax regimes only once in their lifetime. After selecting a new tax regime, they can switch back to the old one, but this option is irreversible. Once they go back to the old regime, they can't switch to the new one again," explained Vijay Bharech, Director at Deloitte Haskins & Sells LLP, a consultancy firm. This rule applies for the 2022-23 fiscal year (Assessment Year 2023-24), as the tax regime law changed starting from the 2023-24 fiscal year (Assessment Year 2024-25).

Is it possible to switch between the new tax regime and the old tax regime while filing a belated ITR?

As per the tax experts: switching from a new to an old tax regime is not always possible in all cases. If you wish to opt for the new tax regime from the old tax regime then you must first fill up the Form 10IE before the last date of filing an original tax return.

However, there are no such pertaining rules to the opposite of switching tax regimes so far. It is yet to be clear for opting the old tax regime from the new tax regime.  

Also Read: Mistakes To Avoid While Filing GST Returns

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