Can I Change Tax Regime while Filing ITR?

Yes, you can change your tax regime while filing your Income Tax Return (ITR).

Since the introduction of the new tax regime in Budget 2020, individual taxpayers and Hindu Undivided Families (HUFs) have had the option to choose between two tax regimes—the old one with deductions and exemptions, and the new one with lower slab rates but no major deductions. While this flexibility is welcome, it also brings up a common question: Can I change tax regime while filing ITR?? And if so, how often can I do it?

If you’re a salaried individual (without business income), you can switch between the old and new tax regimes every year at the time of filing your ITR. However, if you have business or professional income, you can switch regimes only once—after that, switching back to the old regime is restricted.

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Can I Change Tax Regime While Filing ITR?

The income tax rules allow a taxpayer to choose any tax regime while filing an income tax return. This means that an individual who has opted for the old tax regime for TDS on salary for FY 2024–25 can change to the new tax regime while filing an ITR, and vice versa.  

Starting Assessment Year 2024–25 (for income earned in FY 2023–24), the new tax regime is the default. This means that if you don’t choose between the two tax regimes, your tax calculations will automatically follow the new tax regime. However, taxpayers still have the flexibility to opt out of the new tax regime before the last date for filing ITR for the relevant assessment year (AY).

While individual taxpayers can switch between the old and new tax regimes every year, business or professional income earners can only switch once in their lifetime. After that, they must stick to their chosen tax regime.

Old Tax Regime and New Tax Regime

Before diving into the procedure to change the tax regime while filing ITR, let’s first understand the difference between the Old Tax Regime and the New Tax Regime.

What Is the Old Tax Regime?

The Old Tax Regime refers to the traditional income tax system that was in place before the introduction of the new regime in Budget 2020. It allows taxpayers to claim various deductions, exemptions, and allowances to lower their taxable income. These include benefits under sections like:

• Section 80C (investments in PPF, ELSS, LIC, etc.)
• Section 80D (health insurance premiums)
• HRA (House Rent Allowance)
• Home loan interest and more

This regime is beneficial for those who actively invest and claim deductions.

Old Tax Regime – Tax Slabs

What Is the New Tax Regime?

Alongside the old tax system, the New Tax Regime was introduced in Budget 2020 to simplify the tax structure and offer lower tax rates to individuals and Hindu Undivided Families (HUFs). However, unlike the old regime, it does not allow most deductions and exemptions, except for:

• Section 80CCD(2) – Employer’s contribution to NPS
• Section 80JJAA – Additional deduction for new employment (for those with business income)

The main goal of the new regime is to reduce the compliance burden and make tax filing easier. Over time, the government has introduced changes to make this regime more appealing to taxpayers.

New Tax Regime – Tax Slabs

For FY 2024–25 (AY 2025–26):

Note: The rebate under Section 87A is available for income up to ₹7 lakh under the new regime, effectively making income up to that limit tax-free.

Still confused about which regime is right for you? Check out our detailed article on Old vs. New Tax Regime to compare and choose the one that suits you best.

How Can I Change My Tax Regime While Filing ITR?

Changing your tax regime while filing your ITR is simple and can be done with just a click.

For Salaried Individuals

In ITR-1 and ITR-2, you’ll be asked: “Do you wish to exercise the option under section 115BAC(6) of opting out of the new tax regime (default is ‘No’)?”

• If you select ‘No’, your tax will be calculated under the new tax regime.
• If you select ‘Yes’, you’ll switch from the new tax regime to the old tax regime.

Remember: If you choose the old tax regime, this selection must be made before the e-filing due date (31st July). After this date, the new tax regime will automatically apply as the default.

For Business Income

Individuals with income from business or profession (including income from derivatives or options) can also opt to switch to the old tax regime. However, the process is a bit different:

• For ITR-3 and ITR-4, to switch from the default new tax regime to the old regime, you’ll need to file Form 10-IEA before the due date (i.e., July 31st, 2025).
• You must file Form No. 10-IEA before the due date for filing your ITR under Section 139(1) for the relevant year.

Once you choose the old regime, you get a once-in-a-lifetime option to switch back to the new tax regime. After that, switching back to the old regime will not be allowed.

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How Often Can I Switch Between the Two Regimes?

I. Taxpayers with Business Income:

• Limited Switching: If you have business or professional income, switching between the two tax regimes isn’t as flexible.
• One-Time Option: After you opt out of the new tax regime, you only have one opportunity to switch back to the new regime in the future.
• No Going Back: Once you choose the new tax regime, you cannot revert to the old regime in future years.

II. Taxpayers with Non-Business Income:

• Annual Flexibility: If you don’t have business or professional income, you have the freedom to switch between the new and old tax regimes every year. This gives you more flexibility to choose the regime that best suits your financial situation each year.

Switching Tax Regimes: What Salaried Taxpayers Need to Know?

Salaried taxpayers with non-business income have the flexibility to switch between the old and new tax regimes every year. Even if you opted for the new tax regime for TDS deductions throughout the year, you can still choose the old tax regime when filing your Income Tax Return (ITR). However, this choice must be made before the ITR filing due date (i.e., by July 31st of each assessment year). After this date, the new tax regime becomes the default.

Switching to the Old Regime:

• If you decide to opt for the old tax regime after your employer has deducted taxes based on the new tax regime, you can still switch to the old regime while filing your ITR.
• If your employer deducted more taxes under the new regime, you can claim a refund for the excess amount while filing your return.

Switching to the New Regime:

• If you initially opted for the old tax regime but later realise that the new tax regime would be more beneficial, you can switch to the new regime when filing your ITR.
• Similarly, if your employer deducted more taxes under the old regime, you can claim a refund for the excess taxes deducted.

Important Points to Remember

• Declare Your Choice Every Year: You must inform your employer of your tax regime choice at the start of each financial year. If you want taxes to be deducted under the old regime, you must declare this at the beginning of the year.
• Default Tax Regime: If you don’t declare your choice, your employer will automatically apply the new tax regime, as it is the default.
• Switching Between Regimes: You can switch between the old and new tax regimes while filing your ITR before the due date. This gives you the flexibility to select the most beneficial tax regime based on your financial situation at the time.

Tax Regime Switching Rules for Business and Professional Income

As mentioned above, For individuals earning income from a business or profession, the option to switch between tax regimes is limited. Unlike salaried taxpayers, individuals with business income can switch tax regimes only once in their lifetime. For example, once you opt for the new tax regime, you can only switch back to the old regime once during your career.

Expert Tip: As per Budget 2023, the new tax regime is now the default. If you wish to opt for the old tax regime, you must follow the required process and file Form 10-IEA to make your choice.

Procedure to File Form 10-IEA for Business Income Taxpayers

If you earn income from business or profession and want to opt for the old tax regime, you must file Form 10-IEA before the ITR due date (July 31, 2025). Here’s how to do it step by step:

• Log in to the Income Tax e-filing portal using your credentials.
• Go to ‘e-File’ > ‘Income Tax Forms’ > ‘File Income Tax Forms’.
• Locate Form 10-IEA using the list or search bar and click ‘File Now’.
• Select the correct Assessment Year (AY)—for FY 2023–24, it's AY 2024–25.
• Click ‘Let’s Get Started’ and follow the on-screen steps:
• Confirm if you have business/professional income.
• Choose the filing due date.
• Select the regime you’re opting for.
• Fill in your Basic Info, Additional Info (if any), and make the Declaration.
• E-Verify the form using Aadhaar OTP, EVC, or DSC.
• Once submitted, you’ll receive a Transaction ID and Acknowledgment Number—save these for future reference.

 To download the submitted form later, go to ‘e-File’ > ‘Income Tax Forms’ > ‘View Filed Forms’ and download it in PDF format.

Click here to learn more about How Can I File ITR Online? 

Things to Keep in Mind Before Switching Tax Regimes

Switching between the old and new tax regimes isn’t just a one-click decision — a little planning can go a long way. Here are some key things to remember before making the switch:

Understand the Basics

Get familiar with both regimes — the old regime offers deductions and exemptions, while the new regime has lower tax rates but fewer benefits. Know what you’re giving up and what you’re gaining.

Compare Tax Liability

Use a tax calculator to estimate your tax under both regimes. Consider all income sources, exemptions, and deductions to find out which one actually saves you more money.

Impact on Your Investments

The old regime supports tax-saving investments like ELSS, PPF, LIC premiums, etc. If you're planning or already investing in these, switching to the new regime might reduce your tax benefits.

Think Long-Term

Switching tax regimes affects not just this year, but your future plans too. Any expected changes in income, major life events (like marriage, house purchase, kids’ education) — consider how these could influence which regime works best.

Keep Your Docs Ready

Whatever regime you choose, make sure you have all supporting documents (like Form 16, investment proofs, rent receipts, etc.) to validate your claims in case of an audit.

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Conclusion

Certainly, you can change your tax regime while filing your ITR — but it’s important to make an informed decision. Whether you're a salaried individual or a business professional, switching is allowed before the due date. However, don’t make the move in haste! Consider your tax-saving investments, long-term financial goals, and your overall tax liability under each regime before making the switch.

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Frequently Asked Questions

1. Form 10-IE vs. Form 10-IEA: What’s the Difference?

If you're filing your Income Tax Return for FY 2024–25, it’s important to know which form you need. Form 10-IE was previously used to opt for the new tax regime, but since the new regime is now the default, there’s no need to file this form anymore. On the other hand, Form 10-IEA is the current and mandatory form if you want to opt for the old tax regime. So, if you're planning to go with the old regime for FY 2024–25, make sure to submit Form 10-IEA before the ITR deadline—July 31, 2025.

2 .Should You Opt Out of the New Default Tax Regime?

Yes — if you prefer the old tax regime, you must formally opt out of the new regime while filing your ITR. The new regime is now the default as per Budget 2023, and taxpayers who want to stick with the old regime must file Form 10-IEA to make that choice official.

Filing Form 10-IEA ensures your intent is clearly recorded, allows you to claim deductions and exemptions available under the old regime, and keeps your tax filing in compliance with current rules.

3. Opted Out of the New Regime Last Year — Do You Need to Do It Again?

Yes — opting out of the new tax regime last year doesn’t automatically apply to this year. Since the new tax regime is now the default, you’ll need to make a fresh choice every financial year.

What Should You Do?

• If you want to continue with the old tax regime for the current year:
• If you have business or professional income, Submit Form 10-IEA before the due date (usually July 31).
• If you don’t have business income, Simply tick the option to opt out of the new regime directly in your ITR form.

Important: Your previous year’s selection does not carry forward, so be sure to make the right choice again this year before filing your ITR.

4. How to Opt Out of the New Regime?

To opt out of the new tax regime and revert to the old regime for income tax calculations, individuals, Hindu Undivided Families (HUFs), and Association of Persons (AOPs) must follow specific guidelines.

• For Taxpayers with Business or Professional Income: If you're filing ITR-3, ITR-4, or ITR-5, you need to submit Form 10-IEA. This form serves as your declaration to opt out of the new tax regime.
• For Taxpayers without Business or Professional Income: If you are filing ITR-1 or ITR-2, you do not need to submit Form 10-IEA. Instead, you can simply tick the option to opt out of the new regime directly on your ITR form.

In summary, Form 10-IEA is mandatory only for those with business or professional income, while individuals and HUFs filing simpler forms can opt out directly on their ITR form.

5. Can I change my tax regime while filing my ITR?

Yes, you can easily change your tax regime when filing your ITR, opting for the one that best suits your financial needs.

6. What happens if I choose the new tax regime?

Under the new tax regime, you benefit from an increased basic exemption limit of ₹3 lakhs along with limited deductions. This option may be ideal if you don’t have significant investments that qualify for deductions.

7. Which form should I file to opt for the old tax regime?

To switch to the old tax regime for AY 2024-25, you must file Form 10-IEA if you are currently defaulted to the new tax regime.

8. What deductions are available under the new tax regime?

The new tax regime allows for deductions under Section 80CCD(2) and Section 80JJA only.

9.  How to Switch Between Tax Regimes While Filing ITR for FY 2024–25?

When filing your Income Tax Return (ITR), you’ll be asked whether you want to opt out of the new tax regime under Section 115BAC(6).

• If you select “No”, your taxes will be calculated as per the new tax regime (default).
• If you select “Yes”, your taxes will be calculated based on the old tax regime slabs.

Note for Business/Professional Income Earners:

• If you're filing ITR-3 or ITR-4 and opting for the old regime, you must also submit Form 10-IEA before the due date (July 31, 2025).

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