Archives 2024

Form 10-IEA is required to fill by individuals or HUFs those want to continue with the old tax regime in the present financial year ie FY 2023-24. The Budget 2023 proposes that from FY 2023-24, the new tax regime will be considered the default tax regime. By filling Form 10-IEA, taxpayers can choose the old tax regime. They must file the form on or before the due date prescribed for filing an income tax return. Let’s start with the detailed analysis of Form 10-IEA and go through its important aspects.

What is Form 10-IEA

In FY 2022-23 the old tax regime was announced as the default tax regime. Those taxpayers willing to choose the New tax regime must have to file Form 10-IE electronically. But in FY 2023-24 the new tax regime was announced as the default tax regime. And now those taxpayers willing to choose the New tax regime must have to file Form 10-IEA electronically and this action make Form 10-IE which was earlier employed to opt for the new tax regime has now been discontinued

Purpose of Filing Form 10-IEA

let’s understand the purpose of Form 10IEA.

• Individuals and HUF’s having income from profession/business must file Form 10-IEA by adhering to the prescribed deadline under Section 139(1). Please note this revised procedure streamlines the process, enabling individuals without business or professional income to directly specify their preference while filing a tax return by selecting the preferred option.
• The corresponding choice determines the rules and regulations that would be applicable to the assessee.
• Filling Form 10-IEA requires individuals to provide all the necessary information like PAN number, assessment year, name, and current status. These details can be used to accurately categorise and identify taxpayer information.

How to File Form 10-IEA

Follow these steps for filing Form 10-IEA online:

Step 1: Login on the e-filing portal 

Step 2: On the dashboard, click ‘e-File’ > ‘Income tax forms’ > ‘File Income Tax Forms’

Step 3: Scroll down to select Form 10-IEA. Alternatively, enter Form 10-IEA in the search box. Click on ‘File now’ button to proceed.

Step 4: Select the Assessment Year for which you are filing the return. For eg: If you are filing taxes for the income earned in FY 2023-24, then select AY 2024-25. 

Step 5: After checking the documents required for filing the form click on ‘Let’s Get Started’.

Step 6: Select “Yes” if you have Income under the head “Profits and gains from business or profession” during the assessment year. Select the due date applicable for filing of return of income and click on continue.

Note: Use “help document” by clicking on help document hyperlink for the help for selecting the applicable due date.

Step 7: Click ‘Yes’ to confirm the selection of the regime.

 Step 8: Form 10-IEA has 3 sections. Verify and Confirm each section. They are as follows:

i. Basic Information: In Basic Information section, your basic information will be pre-filled. If you are filing form for the first time then opting out option will be auto-selected and if system has valid form with opting out option, then re-entering option will be auto-selected. Click on ‘Save’ button.

ii. Additional Information: Fill the necessary details in Additional information section related to IFSC unit (if any) and click on ‘Save’.

 If you are opting out of new Tax regime this Additional Information panel will be greyed off

iii. Declaration and Verification: Verification section contains self-declaration where you will be required to check the boxes and agree to the terms and conditions. Verify whether all the details are correct and save the information. Once done, click on ‘Preview’ to review Form 10-IEA.

Step 9: After reviewing all the information, ‘Proceed’ to e-verify’. You can e-verify either through:

• Aadhaar OTP
• Digital Signature Certificate (DSC)
• Electronic Verification Code (EVC)

Step 10: After verification Click on ‘Yes’ to submit the Form.

Step 11: After successful e-Verification, a success message is displayed along with a Transaction ID and an Acknowledgement Receipt Number. Please keep a note of the Transaction ID and Acknowledgement number for future reference. You can also download the form and locate the acknowledgment number. 
To download the filed form, go to ‘e-File’ → ‘Income Tax Forms’ → ‘View Filed Forms’.

Introduction:

The new section 43B(h) will be applicable from April 1, 2024 (AY 2024-25), Section 43B(h) of the Income Tax Act introduces significant changes concerning expenses related to purchases or services from Micro and Small Enterprises. Please note this section is not applicable on Medium Enterprises.

43B(h) has been inserted as a Socio-Economic Welfare Measure to ensure timely payments to micro and small enterprises.

We all know that section Section 43B of the Act provides for certain deductions to be allowed only on Actual Payment basis.

Finance Bill 2023 has newly inserted a clause to this section which is as under:

Section 43B (h) of Income Tax Act says:

“any sum payable by the assessee to a MICRO or SMALL enterprise beyond the time limit specified in 15 of the Micro, Small and Medium Enterprises Development Act, 2006,”

The above clause indicated that, in order to be eligible to claim deduction of the sum payable to micro and small enterprises, the payment shall be actually made within the time limit specified in 15 of the MSME Act, 2006.

Section 15 of MSME Development Act, 2006 says:

“Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day*:

Provided that in no case the period agreed upon between the supplier and the buyer in writing shall not exceed forty-five days from the day of acceptance or the day of deemed acceptance”

It is very clear that, the buyer shall make the payment to the supplier as agreed between them, however the same cannot exceed beyond 45 days from date of acceptance or the day of deemed acceptance i.e., from the day of acceptance of the goods/service.

Section 2(b) of the MSME Development Act, 2006 says:

“Appointed Day” means the day following immediately after the expiry of the period of fifteen (15) days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.

Explanation—For the purposes of this clause-

(i) “the day of acceptance” means-

(a) the day of the actual delivery of goods or the rendering of services; or

(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;

(ii) “the day of deemed acceptance” means, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;

Section 16 of MSME Development Act, 2006 says:

“Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank”


Consequences upon Failure to make payment to Micro and Small Enterprises under Section 43B(h)

1. If the payment is made after 45 days or 15 days as specified – then expenses disallowed in the year and deduction will be available in the year in which the payment is made.

• If the payment is due for more than 45 days or 15 days as specified but the payment is made before the end of the Financial Year – then in such case, the deduction of the expense will be available in the same year itself.

The classification of the enterprise as Micro, Small & Medium as defined in Micro, Small and Medium Enterprises Development Act, 2006 is hereby produced for your reference:

• Micro Enterprise
• Investment less than Rs. 1 crore
• Turnover less than Rs. 5 crore

• Small Enterprise
• Investment less than Rs. 10 crore
• Turnover less than Rs. 50 crore

• Medium Enterprise
• Investment less than Rs. 20 crore
• Turnover less than Rs. 100 crore