Tax Regime in India

Yes, you can switch between the old and new tax regimes, but the rules vary based on your income source:

1. Salaried & Pensioners

• You can choose a different regime every financial year while filing your Income Tax Return (ITR).
• Employers typically deduct TDS based on your chosen regime, but you can change it at the time of filing your ITR.

2. Business Owners & Professionals

• • If you have business or professional income, switching is restricted.
  • You can switch from the new regime to the old regime only once in a lifetime.
  • After switching back to the old regime, you must continue with it unless you discontinue your business.

Note: Income up to ₹12,00,000 is effectively tax-free due to the enhanced rebate under Section 87A.

If you claim multiple deductions (like 80C for PPF/EPF, home loan interest, health insurance, HRA), the Old Tax Regime is usually better.

If you don’t invest much in tax-saving options and prefer lower tax rates with a simpler filing process, the New Tax Regime is better—especially after Budget 2025, as it offers a higher exemption limit and rebate up to ₹12 lakh.

For income below ₹12 lakh, the New Regime is generally more beneficial.
For income above ₹15 lakh with many deductions, the Old Regime might save more tax.

Yes, there are penalties for non-filing of Income Tax Returns (ITR) in India. Here’s what happens if you miss the deadline:

1. Late Filing Fees (Section 234F)

• ₹1,000 if your income is below ₹5 lakh.
• ₹5,000 if your income is above ₹5 lakh.
• If you miss filing even after December 31, additional interest and penalties may apply.

2. Interest on Tax Due (Section 234A)

• If you have outstanding tax, you must pay 1% interest per month from the due date until payment.

3. Notice from IT Department

• The Income Tax Department may send notices for non-compliance.
• Repeated non-filing can lead to higher scrutiny & legal action.

4. Prosecution & Penalty (In Serious Cases)

• If tax evasion exceeds ₹25 lakh, there can be a jail term of 6 months to 7 years.
• In other cases, prosecution may result in a fine or up to 2 years of imprisonment.

The due date for filing Income Tax Returns (ITR) in India depends on the type of taxpayer:

1. For Individuals & Salaried Employees

• July 31 of the assessment year (AY).
• Example: For FY 2024-25 (AY 2025-26), the due date is July 31, 2025.

2. For Businesses & Tax Audit Cases

• October 31 (if audit is required under the Income Tax Act).
• Example: If your business turnover exceeds the audit limit, the due date is October 31, 2025.

3. For Companies & TP (Transfer Pricing) Cases

• November 30 (if transfer pricing audit applies).

📌 Late filing after the due date may attract penalties under Section 234F and interest under Section 234A.

EEE, EET, and ETE refer to the tax treatment of investments at three stages: Investment (Contribution), Growth, and Withdrawal.

1. EEE (Exempt-Exempt-Exempt) – Most tax-efficient ✅

• Investment: Tax-free
• Growth: Tax-free
• Withdrawal: Tax-free
• Examples: PPF, EPF, Sukanya Samriddhi Yojana (SSY), Life Insurance maturity proceeds.

2. EET (Exempt-Exempt-Taxable) – Tax at Withdrawal ❌

• Investment: Tax-free
• Growth: Tax-free
• Withdrawal: Taxable
• Examples: NPS (withdrawal portion is taxable), Pension Schemes.

3. ETE (Exempt-Taxable-Exempt) – Tax on Growth ⚠️

• • Investment: Tax-free
  • Growth: Taxable
  • Withdrawal: Tax-free
  • Examples: Fixed Deposits (FDs), NSC (interest is taxable).

Common EEE investments include:

• Public Provident Fund (PPF): Tax-exempt at all stages.
• Employee Provident Fund (EPF): Exempt unless withdrawals are made before 5 years.
• Sukanya Samriddhi Yojana (SSY): Fully exempt under EEE.
• Life Insurance Proceeds: Proceeds from life insurance policies under Section 10(10D).

Investments with EET status include:

• National Pension System (NPS) – Tax-free growth, but 60% of corpus is taxable on withdrawal.
• Pension & Annuity Plans – Contributions tax-free, but pension payouts are fully taxable.
• Deferred Annuity Plans – Tax-free accumulation, but annuity payouts are taxable.
• Superannuation Fund – Employer’s contribution tax-free, but pension received is taxable.

ETE (Exempt-Taxable-Exempt) Investments provide tax benefits at the investment & withdrawal stages, but the growth (interest/returns) is taxable.

Tax Treatment:

1. Investment (Contribution) – Tax-deductible under applicable sections (e.g., 80C). ✅
2. Growth (Interest/Returns) – Taxable annually as per your income slab. ❌
3. Withdrawal (Maturity/Redemption) – Tax-free. ✅

Examples of ETE Investments in India:

• Fixed Deposits (FDs) (5-year tax-saving FD) – Investment under 80C, but interest is taxed annually.
• National Savings Certificate (NSC) – Deduction under 80C, but interest earned is taxable each year.
• Recurring Deposits (RDs) – Investment is not deductible, and interest is taxable annually.
• Post Office Monthly Income Scheme (POMIS) – Principal is tax-free, but interest is taxable.