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Feb 29, 2020
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Belated ITR filers can't use new tax regime unless govt clarifies
From the financial year (FY) 2020-21, an individual can choose between the new tax regime proposed in Budget 2020 and the existing one at the time of filing of income tax return (ITR) as per his/her convenience. The proposed new tax regime offers lower income tax rates without the benefit of 70 tax exemptions and deductions.
According to chartered accountants and tax experts, individuals opting for the new tax regime should keep in mind that their tax liability will be calculated according to the proposed new tax rates if the tax return is filed before the normal deadline for filing of ITRs, i.e., July 31, unless extended by the government.
According to the Finance Bill, 2020, if an individual opts for the new tax regime for FY 2020-21, but files ITR after the deadline (i.e., after July 31), then the individual's tax liability will be calculated as per the existing tax regime. The tax liability calculated as per the existing tax regime will be higher as compared to that payable under new proposed tax regime if tax benefits such HRA, section 80C etc. claimed under existing regime is not sufficient for the tax liability to be less than under the proposed new tax regime.
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