Income Tax: Here's If You Can You Switch Tax Regimes Every Year?

Old and new tax regime (NTR)

For an individual to choose between the old and new tax regimes has become important as the Union Budget 2025 has announced the new tax regime as default.

Salaried taxpayers

Salaried employees can switch between the new and old tax regimes each year.

Business owners

For business owners, the rules are difficult as they can not switch back and forth freely after selecting the New tax regime.

Switch between OTR and NTR

For one to select the OTR, it is important to choose the ‘Opting Out of New Tax Regime’ from Form 10-IEA.

Who has to submit it?

Individuals, Hindu Undivided Families, (Association of Persons - not being co-operative societies), (Body of Individuals) or Artificial Juridical Persons with business or professional income need to submit Form 10-IEA if they wish to pay income tax as per the old tax regime.

Other taxpayers

Other taxpayers who do not have income from business or profession can choose the “Opting out of new regime” in the ITR form without the need to file Form 10-IEA. It is important to remember, that you can make this choice as long as you’re making your decision before the ITR filing deadline under Section 139(1) of the Income Tax Act.

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