Q. I am 25 and have recently started working. How can I file my taxes before March 31, 2023? Should I opt for the old tax regime or the new?
March 31 marks the end of a financial year. You are expected to file your returns for the period April 1, 2022 to March 31, 2023 by July 31, 2023. You must receive your Form 16 (a certificate of tax deductions made from your income on your behalf) from your employer. If you receive this on time, it is advisable to file your returns by the end of April.
It is not clear if you have been working for the whole of the last financial year. You need to check if you fall under the tax bracket at all. If not, you can still file what is called a nil return. If you have earned enough to pay tax, you need to choose between the old tax regime and the new and work out the best ways to save tax.
Pick the regime that is better for you by considering a few factors.
Under the old regime, you can claim tax deduction under the relevant sections of the tax law, if you have made an eligible contribution or expenditure. Some examples are:
- Investment in an equity-linked savings scheme (Section 80C)
- Contribution to employees’ provident fund (80C)
- Life insurance premium (80C)
- Health insurance premium (80D)
- Interest on housing loan up to ₹2 lakhs (Sec 24)
- Rent paid, if receiving house rent allowance (HRA) from employer (Sec 10 (13A)
These deductions are available under the old regime but not under the new regime. Also, standard deduction of ₹ 50,000/- for the financial year 2022-23 is available under the old regime only.
Opt for the regime that will help you save maximum tax. accordingly. You may choose another regime next year. The change in tax regime can happen for every year if you are a salaried person.
However, if you have business income as a part of your income, then the change in regime can happen only once. So that means that if you have business income, you should be extra cautious while opting for change in regime.
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