How to Switch Between Old and New Tax Regimes Online
- PRITI SIRDESHMUKH
- 22 hours ago
- 10 min read
Switching between the old and new tax regimes online under the Income Tax Act, 1961 is designed to give flexibility and control to taxpayers. The process differs depending on whether income is from salary, pension, or business/profession. Salaried individuals can change regimes each year during ITR filing, while business or professional taxpayers must file Form 10-IEA before the ITR deadline. These changes reflect the government’s intent to simplify compliance and make regime selection easier for every taxpayer in India.
Switching between the old and new regimes can be done directly online by selecting the preferred option during ITR filing or by submitting Form 10-IEA for business income taxpayers.
Table of Contents
What Does Switching Tax Regimes Mean?
Switching tax regimes refers to choosing between the two available income tax systems in India — the old regime and the new regime — under Section 115BAC of the Income Tax Act, 1961. The old regime allows taxpayers to claim various deductions and exemptions, such as HRA, 80C, 80D, and home loan interest. In contrast, the new regime offers lower tax rates but removes most deductions and exemptions.
The option to switch between these regimes provides flexibility for taxpayers to select the structure that best suits their financial situation. Salaried individuals can choose the regime each year while filing their Income Tax Return (ITR), while those with business or professional income need to make the switch through a formal declaration using Form 10-IEA before filing their ITR. This ensures compliance and transparency in tax computation as per government guidelines.
How to Switch Between Old and New Tax Regimes Online
The Income Tax Department allows taxpayers to switch between the old and new regimes through the e-filing portal. The process depends on the nature of income:
Salaried individuals and pensioners can change regimes while filing their ITR by selecting the appropriate checkbox.
Taxpayers with business or professional income must file Form 10-IEA online before the due date of their ITR.
Switching is entirely digital and can be done using a registered PAN-based login. The form submission and e-verification ensure the taxpayer’s choice is recorded accurately for that assessment year. Once submitted, the change reflects automatically in the ITR filing process.
Steps to Switch for Salaried and Non-Business Taxpayers
For individuals earning income from salary or pension, the process of switching is simple and can be completed within minutes through the income tax e-filing portal:
Log in to the Income Tax e-filing portal using PAN and password.
Start your ITR form (ITR 1 or ITR 2, depending on your income sources).
Locate the question: “Do you wish to exercise the option u/s 115BAC(6) of opting out of the new tax regime?”
Select “Yes” if you want to switch to the old regime or “No” to continue with the new regime.
Complete the rest of the ITR form with your details.
E-verify your return using Aadhaar OTP, DSC, or EVC to confirm submission.
This option can be changed every financial year, making it convenient for salaried individuals to adapt to changing tax preferences or deductions.
Steps to Switch for Business or Professional Income Taxpayers
For individuals or entities earning income from business or profession, the process requires a separate filing before ITR submission:
Log in to the Income Tax e-filing portal using PAN credentials.
Navigate to e-File > Income Tax Forms > File Income Tax Forms.
Search for and select Form 10-IEA and click on “File Now.”
Choose the applicable assessment year.
Fill in details such as PAN, nature of income, and business/profession type.
Indicate your preference to switch to the old regime by selecting “Yes.”
Verify all auto-filled information and make corrections if needed.
E-verify using any available method such as Aadhaar OTP, EVC, or DSC.
Upon submission, you will receive an acknowledgement number and transaction ID for future reference.
Form 10-IEA must be filed before the ITR deadline. Once opted out of the new regime, business/professional taxpayers cannot re-enter the new regime in subsequent years unless specific withdrawal conditions apply.
Frequency and Restrictions on Changing Regimes
The flexibility to switch between regimes varies depending on the source of income:
Salaried and pensioners: They can change regimes every year by simply choosing the preferred option during ITR filing. This allows greater adaptability for tax planning.
Business or professional taxpayers: They can opt out of the new regime only once. Once the option to exit is exercised through Form 10-IEA, they cannot revert to the new regime unless specific withdrawal conditions are met.
Each financial year’s choice is independent and does not automatically carry forward. Hence, taxpayers must confirm their regime selection every time they file their return.
Key Differences Between Old and New Tax Regimes
The old and new tax regimes differ in tax rates, exemptions, and deductions. The old regime allows taxpayers to claim multiple exemptions, while the new regime offers reduced tax rates but eliminates most deductions.
The old regime remains suitable for individuals who claim substantial deductions such as 80C, 80D, or HRA. The new regime benefits those with limited deductions but higher income, offering simplified compliance and lower effective tax rates.
Is HRA, 80C, and Other Deductions Allowed in the New Tax Regime?
Under the new regime, most common deductions and exemptions available under the old system are not permitted. These include:
House Rent Allowance (HRA)
Standard deduction for salaried employees (only limited version applicable now)
Deductions under Section 80C (like LIC, PPF, ELSS)
Health insurance premium under Section 80D
Interest on home loan for self-occupied property
However, some limited exemptions such as employer’s contribution to NPS, gratuity, and leave encashment benefits continue under the new regime.
The old regime still remains advantageous for those claiming significant deductions. In contrast, the new regime offers a cleaner structure with fixed tax rates and fewer calculations, appealing to taxpayers preferring simplicity.
How to File Form 10-IEA Online
Form 10-IEA is mandatory for taxpayers earning income from business or profession who wish to opt out of the new tax regime. It records the taxpayer’s declaration and ensures compliance. The process is as follows:
Visit the official Income Tax portal.
Log in with your PAN and password.
Go to e-File > Income Tax Forms > File Income Tax Forms.
Search for Form 10-IEA and click on “File Now.”
Choose the applicable assessment year.
Fill in the required details including PAN, name, and profession type.
Select “Yes” to confirm opting out of the new regime.
Review and e-verify the form using Aadhaar OTP, EVC, or DSC.
Save the acknowledgement number generated after submission.
This form must be filed before the ITR deadline for the selection to be valid for that assessment year.
Common Errors to Avoid While Switching Regimes
Many taxpayers make errors while switching regimes online, which can delay or invalidate their return. Common mistakes include:
Selecting the wrong regime option in the ITR form.
Failing to file Form 10-IEA for business/professional income.
Assuming last year’s regime automatically applies.
Missing the ITR or Form 10-IEA deadline.
Not e-verifying the submission correctly.
It is advisable to review the chosen regime carefully before final submission. Using automated platforms like TaxBuddy minimizes such errors by validating entries and ensuring compliance with filing rules.
How TaxBuddy Simplifies Regime Switching and ITR Filing
TaxBuddy offers an AI-driven tax filing platform that simplifies regime selection and filing under the Income Tax Act. The system automatically identifies whether a taxpayer falls under the salaried or business category and guides them through the correct process. For salaried individuals, it suggests the most tax-efficient regime based on available deductions, while for business or professional taxpayers, it helps pre-fill and submit Form 10-IEA accurately.
TaxBuddy also provides both self-filing and expert-assisted plans, ensuring that even complex cases are handled with precision. With real-time validations, auto-checks, and guided steps, taxpayers can easily avoid errors and file with confidence.
Conclusion
Switching between the old and new tax regimes online has become more structured and convenient, enabling taxpayers to optimize their tax outcomes. Salaried individuals can toggle between regimes each year directly through their ITR, while business or professional taxpayers can file Form 10-IEA to make the switch. The process ensures flexibility, compliance, and better financial planning.
For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides flexibility through two filing options — self-filing and expert-assisted filing. The self-filing plan is designed for individuals who are comfortable filing their own returns but want AI-powered guidance, auto-filled data from Form 16, and real-time error checks. The expert-assisted plan, on the other hand, connects users with experienced tax professionals who review all documents, optimize deductions, and ensure accurate filing for complex cases such as capital gains, business income, or foreign assets. Both plans guarantee a secure and seamless experience with post-filing support.
Q2. Which is the best site to file ITR?
While the official Income Tax Department portal is the government-authorized platform for filing income tax returns, taxpayers often prefer third-party platforms like TaxBuddy for a smoother experience. TaxBuddy integrates directly with the government’s e-filing system but offers enhanced usability — such as automatic data entry, pre-filled forms, AI-driven accuracy checks, and expert guidance. This ensures that taxpayers can file error-free returns without worrying about technical complexities.
Q3. Where to file an income tax return?
Income tax returns in India can be filed online in two ways — directly on the Income Tax e-filing portal (www.incometax.gov.in) or through trusted third-party e-filing platforms like TaxBuddy. On the official portal, taxpayers must manually enter their details and ensure accuracy themselves. In contrast, TaxBuddy offers a simplified process with auto-fetch of Form 16 data, pre-validation of TDS entries, and a guided flow for selecting the right ITR form and regime. Both methods are valid, but TaxBuddy makes the process faster, easier, and more secure.
Q4. Can salaried taxpayers switch between old and new regimes every year?
Yes, salaried individuals and pensioners can switch between the old and new tax regimes each financial year. This flexibility allows them to reassess which regime results in lower tax liability depending on their deductions, allowances, and income changes. For example, one year, a salaried person may find the old regime beneficial due to 80C and HRA deductions, while the next year, the new regime’s lower slab rates might offer better savings. However, the selection must be made while filing the ITR, as once submitted, it cannot be modified for that year.
Q5. Is Form 10-IEA mandatory for all taxpayers?
No, Form 10-IEA is not required for everyone. It is mandatory only for taxpayers who have income from business or profession and wish to opt out of the new tax regime. This form is a formal declaration of the taxpayer’s choice and must be filed before the ITR due date. Salaried individuals and pensioners are not required to submit Form 10-IEA; they can simply choose their preferred regime within the ITR form itself. Filing this form ensures compliance under Section 115BAC(6) and prevents any confusion about regime selection during assessment.
Q6. What is the deadline to file Form 10-IEA?
Form 10-IEA must be filed before the due date of ITR filing for the relevant assessment year. For most individual taxpayers, the usual deadline is July 31, but it can vary if extensions are announced or if tax audit provisions apply. For the assessment year 2025–26, the expected last date is September 15, 2025, based on recent updates. Filing the form after the deadline may invalidate the taxpayer’s regime selection, which means the previous year’s regime could automatically apply. Hence, timely filing and e-verification are crucial.
Q7. Can regime selection be changed after ITR submission?
No, once the Income Tax Return (ITR) is submitted and verified, the regime selection becomes final for that financial year. If a taxpayer realizes an error after submission, the only way to make changes is by filing a revised return before the due date, provided the new selection complies with eligibility rules. However, for business or professional taxpayers who already filed Form 10-IEA, switching back is restricted unless withdrawal conditions are met. Therefore, taxpayers should review their tax calculations carefully before confirming their return.
Q8. How does regime choice affect my basic exemption limit?
The basic exemption limit differs between the two regimes. Under the old regime, the exemption limit is ₹2.5 lakh for individuals below 60 years, ₹3 lakh for senior citizens, and ₹5 lakh for super senior citizens. Under the new regime, the exemption limit is standardized at ₹3 lakh for all taxpayers, with simplified tax slabs offering lower rates. While the new regime seems more lenient on slab rates, it disallows most deductions like 80C, 80D, and HRA, which could result in higher taxes for those with significant eligible deductions.
Q9. What documents are required to switch regimes online?
Switching regimes does not require any physical documents. Taxpayers only need their PAN, Income Tax portal login credentials, and relevant income details while filing ITR. For business or professional taxpayers, Form 10-IEA requires a few additional fields like IFSC code, professional category, and bank details for refund credit. It’s advisable to keep Form 16, TDS certificates, and investment proofs ready, especially for those opting for the old regime, to ensure accurate reporting and compliance during the online process.
Q10. Are there penalties for switching regimes frequently?
There are no penalties for salaried taxpayers who switch between regimes every year. However, the switch must be done correctly while filing the ITR. Business and professional taxpayers face restrictions — once they opt out of the new regime using Form 10-IEA, they cannot return to it unless specific withdrawal criteria under Section 115BAC(6) are satisfied. Incorrect or late filing, wrong selection, or missed deadlines can lead to notices or invalidation of the chosen regime, which may require re-filing within permitted timelines.
Q11. How can TaxBuddy help in regime selection and filing?
TaxBuddy’s AI-based filing system automatically analyses income details, deductions, and exemptions to recommend the most tax-efficient regime. The platform pre-fills information from Form 16, detects inconsistencies, and guides users step-by-step during ITR filing. For business or professional taxpayers, it ensures accurate completion and submission of Form 10-IEA within deadlines. With both self-filing and expert-assisted options, TaxBuddy minimizes the chances of human error and ensures a seamless, compliant, and error-free filing experience.
Q12. Does regime switching affect tax refund processing time?
No, switching between tax regimes does not delay refund processing, provided the ITR is filed and verified correctly before the due date. The refund timeline depends on the accuracy of bank details, timely verification, and processing speed of the Income Tax Department. Whether the taxpayer chooses the old or new regime, refunds are credited directly to the pre-validated bank account. Using platforms like TaxBuddy helps ensure accurate filings and reduces chances of processing delays caused by mismatched data or form errors.
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