Regular tax regime or simplified one? Here's how taxpayers can make the right choice

"It's recommended to choose a regime and prepare a list of investments to be made, calculate the tax implications, and invest before March 31st," says Saraswathi Kasturirangan, Partner, Deloitte India. Edited excerpts.

With the deadline approaching, should taxpayers choose their tax regime now or wait until the next financial year?

It's crucial for taxpayers to decide which regime they want to come under before the deadline. If they plan to continue with the regular tax regime, they must make investment decisions accordingly. It's important to calculate which regime is more favorable for them and which investments they should leverage on. Taxpayers should not make investments only for tax benefits if they will ultimately fall under the simplified tax regime that does not provide deductions for tax-saving investments. It's recommended to choose a regime and prepare a list of investments to be made, calculate the tax implications, and invest before March 31st. While technically taxpayers have time till the tax return filing to choose a regime, there's no point in opting for the regular tax regime if the investments are not made before the deadline. It's crucial to do the homework now.

If someone wants to stick to the regular tax regime, what should be their to-do list?

Firstly, you should gather all the possible deductions available under the regular tax regime, such as HRA and leave travel concessions. Collect all the receipts and calculate the estimated deductions. Also, check if there are any investments that you are obligated to make, such as life insurance premiums and contributions to Provident Fund and National Pension Scheme. These investments are available under both the regular and simplified tax regime. However, if you make employee contributions to NPS, it is available only under the regular tax regime under section 80-C. You should identify which investments qualify under the regular and simplified tax regimes. You can also consider investments such as Public Provident Fund, National Savings Scheme, Equity-Linked Savings Scheme, and ULIPs.

Make a list of investments that you have already started and decide which ones you want to continue with. For some investments, you may not be able to stop, but you can reduce the amount of investment. For example, you can lower the investment amount in Public Provident Fund. Look at all the investments available under Section 80-C, which has a limit of 1.5 lakhs. Some investments are mandatory, some can be taken year-on-year, and some can be decided on a yearly basis.

Additionally, you should also consider other factors such as set off of loss from a house property, which is only available under the regular tax regime. It is important to keep these factors in mind before making a decision on which tax regime to choose. So, make a comprehensive list of all the possible deductions and investments available under the regular tax regime, and decide which investments you want to continue or reduce, and make sure to do it before March 31st.