New Delhi: Filing Income Tax Returns (ITR) can be confusing, especially when choosing between the old and new tax regimes. While the government made the new tax regime the default option in Budget 2023, taxpayers can still opt for the old one if they prefer. But can you switch between tax regimes every year? And what about business owners—do they have the same flexibility? Understanding these rules is crucial, as your decision can directly impact your tax savings.
You can switch between the old and new tax regimes every year if your income comes from salary, interest, or rent (non-business income). So, if you picked the new tax regime last year, you can go back to the old one this year. However, this choice must be made before the ITR filing deadline (July 31, 2025). The Income Tax Department states that you can opt for the old tax regime only if you file your return on time.
For those earning from business or professional income, switching tax regimes isn’t as flexible. Individuals, HUFs (Hindu Undivided Families), AOPs (Association of Persons), BOIs (Body of Individuals), and Artificial Juridical Persons cannot change their tax regime every year. If they opt for the new tax regime and later decide to switch to the old one, they can’t revert to the new regime again. They get only one chance to switch back.
As per Budget 2023, taxpayers opting for the old tax regime must submit Form 10-IEA before filing their ITR. This form confirms their chosen tax regime and eligibility. Salaried individuals and those with non-business income can switch between the old and new tax regimes every year. However, they must make their decision before the ITR filing deadline. If you want to continue with the old tax regime, you must opt for it before the deadline under Section 139(1) of the Income Tax Act.
ITR Filing 2025: Key Deadlines You Need to Know
The Income Tax Department has set July 31, 2025, as the deadline for taxpayers who do not require an audit to file their Income Tax Return (ITR) for FY 2024-25 (AY 2025-26). If you miss this deadline, you can still file a belated return by December 31, 2025, but a late fee will apply. Already filed your ITR but want to switch your tax regime? You can file a revised return, but only if your original return was submitted before the due date.
Which Tax Regime Should You Choose?
Before filing your ITR, it’s important to decide whether the old or new tax regime is more beneficial for you.
Old Tax Regime: Allows various exemptions and deductions, including:
- Section 80C (PPF, EPF, Life Insurance)
- Section 80D (Medical Insurance)
- HRA (House Rent Allowance)
- New Tax Regime: Offers lower tax rates but does not allow most exemptions and deductions.
Choose wisely based on your income, investments, and tax-saving goals.
