Can you change income tax regimes while filing revised ITR?

It is possible that after filing income tax return (ITR), you might realise that you have forgotten to report certain incomes or that the tax payable in the other tax regime is lower than what has been paid. The question then is can you switch your income tax regime (old to new or vice versa) while filing a revised income tax return?

ET Wealth spoke to various tax experts and chartered accountants to shed more light on this issue. Do read it, but also remember that the last date of filing revised ITRs is December 31, 2022, for FY 2021-22 (AY 2022-23).

Do note that if you are filing or have filed belated income tax return, then you are not eligible to opt for new income tax regime as per income tax laws. Hence, if you revise your belated ITR, then also you cannot opt for new tax regime.

Abhishek Soni, CEO of ITR filing website There is not much clarity on whether an individual can switch tax regimes while filing a revised income tax return. However, in our view, whether a switch can happen or not depends on the type of income. If the taxpayer has a salary income, then the income tax regime can be changed while filing a revised ITR. If the taxpayer has a business income, then changing the tax regime is not allowed at the time of filing a revised ITR.

Ruchika Bhagat, chartered accountant and MD, Neeraj Bhagat & Co: Yes, for an individual, it is possible to change the income tax regime while filing a revised ITR. One can choose between the old or the new regime. To do this, the original ITR must have been filed before the due date. The ITR form that will be used to file the revised ITR has an option to select a tax regime. The income tax is computed according to the tax regime chosen. There are no consequences as such for changing the income tax regime. If there is any discrepancy, then an intimation will be sent to the individual. However, that’s normal and not related to shifting of the tax regime.

Naveen Wadhwa, chartered accountant and DGM, An individual taxpayer can file a revised return if he committed any error or omission in the original return. Switching the tax regime is neither an error nor an omission. Thus, he cannot file a revised return merely to change his tax regime. The e-filing income tax portal may allow him to upload the revised return. But, subsequently, the assessing officer can deny such a change on the grounds that it is not an error or omission. A similar issue has been dealt with by the Supreme Court in the case of PCIT v. Wipro Ltd. The court held that a revised ITR can’t be filed to convert the original return into loss return in absence of any omission or mistake. However, in case a revised ITR is filed to report an income or correct the error related to calculation of tax payable, then changing of tax regime is allowed.

S Vasudevan, Executive Partner, Lakshmikumaran & Sridharan Attorneys: On the basis of a plain reading of the Income-tax Act, it seems that the new tax regime under Section 115BAC can be availed only if the individual taxpayer files the ITR before the due date. In case a taxpayer does not choose the new tax regime in the original ITR, he or she can make a switch while filing the revised ITR. This should be sufficient if an individual taxpayer complies with the requirements at the time of filing the revised ITR. As a matter of fact, even the income tax portal allows a taxpayer to exercise this option for the first time while filing the revised ITR. In case the tax authorities raise a dispute on the ground that the option was not exercised in the original ITR, the taxpayers may have to litigate the matter based on judicial precedents.

Dr Suresh Surana, Founder, RSM India, a tax consulting group: The Income-tax Act does not specifically provide for change of tax regime option while filing the revised return nor does it prohibit such a move. Thus, the option to change the income tax regime while filing a revised ITR would depend on the following cases:

a) If the ITR is filed on or before the expiry of the due date: If a taxpayer with business income has filed ITR opting for the old tax regime on or before July 31 and intends to opt for the new tax regime in revised ITR, he may do so by filing Form 10IE. However, the taxpayer may not be able to opt for the old tax regime while filing the revised ITR if he had opted for the new tax regime in the original ITR. This is because Form 10IE once filed cannot be withdrawn during the year. Other taxpayers (having salary income) may revise their tax returns by opting for a different tax regime, though the tax authorities may go for litigation.

b) If a belated ITR is filed: According to income tax laws, a taxpayer (irrespective of his/her income source) cannot opt for a new tax regime while filing a belated ITR. Hence, individuals having any type of income (business or salary income) cannot switch to the new tax regime while filing a revised ITR.

There is no specified penalty for changing the tax regime while filing a revised return u/s 139(5) of the Income-tax Act. The revenue authorities can take action at their discretion. However, revision of the tax liability of the taxpayer can result in the revision of interest u/s 234A, 234B and 234C and revisions in the set-off and carry-forward of losses, etc.

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