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Salaried individuals can switch tax regimes annually when filing ITR; business owners can switch once; the new regime offers lower rates but fewer deductions.
Salaried individuals and pensioners can choose either regime at the time of filing their income tax return (ITR) every year.
ITR Filing 2025: As the ITR filing 2025 season is going on with a total of 12,33,162 income tax returns already filed, salaried individuals are awaiting their Form 16 from employer to file ITR this year. There is a common question among taxpayers: Can I change my tax regime while filing my ITR? Experts said the answer depends on your source of income and how you plan your taxes for the financial year.
Understanding the Old vs New Tax Regime
Introduced in FY 2020-21 under Section 115BAC, the new tax regime offers lower tax rates but removes most deductions and exemptions such as HRA, standard deduction, 80C, etc.
Also Read: Can You File Missed ITRs For 4 Years? Here’s How The New ITR-U Window Works
The old regime, on the other hand, continues to allow taxpayers to claim various deductions and exemptions, but with comparatively higher slab rates.
Old vs New Tax Regime: Here’s a comparison for FY25 or AY26:
New Tax Regime (Default for AY 2025-26)
| Income Slab (Rs) | Tax Rate |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 – 6,00,000 | 5% |
| 6,00,001 – 9,00,000 | 10% |
| 9,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
- Standard deduction of Rs 50,000 available for salaried and pensioners
- Section 87A rebate: No tax up to Rs 7 lakh taxable income
- Most exemptions and deductions not allowed (except for NPS employer contribution, EPF interest, etc.)
Old Tax Regime
| Income Slab (Rs) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Can You Switch Tax Regimes While Filing ITR?
Yes, salaried individuals and pensioners can choose either regime at the time of filing their income tax return (ITR) every year.
“If you didn’t inform your employer during the year or now wish to change your tax regime, you can do so at the time of filing your return,” said an income tax practitioner.
However, for those with business or professional income, the flexibility is limited, he added.
Who Can Switch Annually?
Salaried individuals and pensioners: They individuals can switch between old and new tax regimes every year.
Self-employed or business owners: They can opt in or out only once. After opting out of the new regime once, they cannot choose it again in future years (unless business income ceases).
This is governed by Section 115BAC of the Income Tax Act, 1961.
Is the Tax Regime Option Locked Once Selected?
Salaried individuals: No, it’s not locked. You can change your choice every assessment year.
Business/profession income taxpayers: Yes, once you switch back to the old regime, you cannot opt for the new regime again unless you stop having business income.
How to Change Tax Regime While Filing ITR?
You can choose your preferred tax regime directly while filing your ITR online. Here’s how:
Steps to change tax regime on the Income Tax Portal:
- Login to https://www.incometax.gov.in
- Go to e-File > Income Tax Return > File Income Tax Return
- Select the relevant Assessment Year
- Choose Online Mode of filing
- On the ‘Personal Information’ page, you’ll see the question:
- ➤ “Are you opting for the new tax regime under section 115BAC?“
- Choose Yes (for new regime) or No (for old regime)
- If you select ‘Yes’, you may be required to submit Form 10IEA (for AY 2024-25 onwards)
- Continue filling out the return and submit
Note: From AY 2024-25 onwards, the new tax regime is the default. You need to opt out if you want to stick with the old regime.
FAQs
1. Can I switch back to the old regime after opting for the new one?
Salaried individuals: Yes, every year.
Business income: You can switch only once. After opting out of the new regime, you cannot opt in again unless your business/professional income ceases.
2. What happens if I forget to choose the regime while filing ITR?
If you don’t make a choice:
- From AY 2024-25, the new regime will be applied by default.
- You will miss out on deductions allowed in the old regime unless you opt out explicitly.
3. Is Form 10IEA required?
Yes, for AY 2024-25 onwards, Form 10IEA is mandatory for opting in or out of the new regime in some cases — especially for those with business income.
Salaried individuals usually do not need to file it unless explicitly asked based on portal prompts.
So, you can change your tax regime while filing ITR, but only salaried individuals have the freedom to switch every year. Business owners or professionals can make the change only once. Be mindful of the tax-saving opportunities each regime offers and make your choice wisely based on actual calculations.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso… Read More
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