I’m working with the Indian Military. Till final yr, we acquired Kind 16 beneath the previous tax regime, which included all allowances corresponding to home hire allowance, journey, uniform, and so forth. Nevertheless, from AY 2024-25, we’re receiving Kind 16 beneath the default new tax regime, which doesn’t point out non-taxable allowances. My wage revenue exceeds ₹12 lakh. I’ve filed my ITR beneath the previous tax regime, claiming the identical deductions as final yr. Is that this the proper method? The ITR is at the moment being processed.
—Title withheld on request
The brand new tax regime (NTR) was launched by the Finance Act 2020. At the moment, NTR was an non-compulsory regime whereas the previous tax regime (OTR) remained the default regime.
Nevertheless, efficient AY 2024-25, NTR has been made the default regime and OTR has been made non-compulsory. Consequently, except the worker expressly declares to the employer that he desires to use OTR for his wage tax calculations, the employer would by default apply the NTR.
Below the NTR, sure specified exemptions or deductions in the direction of HRA, Depart Journey Allowance (LTA), set-off of loss from home property, Chapter VIA deductions (80C, 80D and so forth.), amongst others, are usually not obtainable.
Even when the employer has utilized the default NTR whereas computing taxes on wage and, therefore, not offered the deductions, a salaried taxpayer should still select to choose out of the default NTR and apply the OTR, whereas submitting the annual income-tax return, offered the return is filed inside the relevant statutory due date of submitting of unique tax return (31 July 2024) for FY24 within the case of salaried taxpayers not topic to tax audit.
In case the identical applies to you, it ought to be inside the tax provisions, and chances are you’ll await the processing of your tax return.
Having mentioned this, since Kind 16 is issued by the employer beneath NTR and return of revenue is filed by you beneath OTR claiming further deductions or exemptions, it can be crucial that you’ve got the documentary proof in assist of such deductions and exemptions being claimed within the income-tax return, in case of any evaluation or enquiry from the income-tax division at a future date.
—Parizad Sirwalla is companion and head, world mobility providers, tax, KPMG in India.
