How to Switch Regimes in the ITR Portal if You Made a Mistake
- Rashmita Choudhary
- Sep 16
- 9 min read
Selecting the correct tax regime is a crucial decision for taxpayers, as it directly impacts the total tax liability for the Financial Year. India offers two primary options: the old tax regime, which allows various deductions and exemptions under sections like 80C, 80D, and HRA, and the new tax regime, which provides lower tax rates but limits most deductions. Choosing the right regime depends on factors such as income structure, eligible deductions, and personal financial planning goals. Errors in selecting a tax regime can lead to higher tax liability or incorrect filings, but the Income Tax Department allows taxpayers to correct these mistakes before or after filing. Let's explore the process of understanding tax regime options, switching between regimes, and ensuring accurate filing, along with practical steps to use tools like TaxBuddy for a seamless experience.
Table of Contents
Understanding the Tax Regime Options
The old tax regime is ideal for taxpayers who have significant deductions or exemptions to claim, such as investments under Section 80C, health insurance premiums under Section 80D, or House Rent Allowance (HRA). It allows taxpayers to reduce taxable income by taking advantage of these deductions, which can significantly lower tax liability.
The new tax regime, on the other hand, provides a simplified tax structure with lower tax rates across slabs but restricts most exemptions and deductions. It is beneficial for those who do not have major deductions to claim and prefer a straightforward approach without the need for extensive documentation.
Choosing the correct regime requires careful analysis of your income, investments, and eligible deductions to optimize your tax savings for the year.
When Can You Switch Between Regimes?
Taxpayers have the flexibility to choose their preferred tax regime at the time of filing their Income Tax Return (ITR). Individuals and Hindu Undivided Families (HUFs) can select either the old or new regime annually.
For salaried employees, the tax regime is initially determined by the employer’s Form 16 and the tax calculation based on salary structure. If a mistake is identified before filing the return, the taxpayer can correct it while submitting the ITR.
It is important to note that the option to switch regimes applies only to eligible taxpayers and must be exercised within the ITR filing window. Businesses or individuals required to undergo audit cannot switch regimes arbitrarily; their choice must align with compliance requirements.
How to Correct a Tax Regime Mistake Before Filing
If you notice that the wrong tax regime has been selected during preliminary calculations or in Form 16, the correction can be made directly in the ITR form before submission.
Steps include:
Logging into the Income Tax e-filing portal.
Selecting the correct ITR form applicable to your income and tax profile.
Updating the tax regime option to either old or new.
Rechecking all deductions, exemptions, and tax calculations based on the selected regime.
Saving and submitting the updated ITR.
Using platforms like TaxBuddy can simplify this process, ensuring accurate selection of the tax regime and automatic recalculation of tax liability.
How to Correct a Tax Regime Mistake After Filing
If the ITR has already been filed under the wrong regime, taxpayers can rectify the mistake by filing a revised return under Section 139(5) before the end of the assessment year.
Steps include:
Accessing the ITR filed on the e-filing portal.
Choosing the “Revised Return” option.
Correcting the tax regime selection.
Verifying and submitting the revised return.
Filing a revised return ensures that the correct tax regime is applied, avoids errors in tax computation, and helps claim eligible refunds or avoid additional liability. TaxBuddy offers guidance on revised returns, helping taxpayers correct mistakes efficiently.
Step-by-Step Process to Switch Tax Regimes in ITR Portal
Log in to the Income Tax e-filing portal using your credentials.
Navigate to “File Income Tax Return” and select the applicable assessment year.
Choose the appropriate ITR form based on your income type and eligibility.
Select the desired tax regime (old or new) on the form.
Update income details, deductions, and exemptions according to the chosen regime.
Review the computed tax liability and verify the accuracy.
Submit the ITR and e-verify using Aadhaar OTP, net banking, or other available methods.
Platforms like TaxBuddy can pre-fill relevant data, validate regime selection, and provide a seamless interface to avoid errors.
Important Deadlines and Rules for Switching Regimes
Selecting the appropriate tax regime is a critical step for taxpayers, as it determines the tax liability, available deductions, and overall financial planning for the assessment year. Taxpayers are required to finalize their choice of either the old tax regime or the new tax regime while filing their Income Tax Return (ITR) for the respective assessment year. This decision impacts the computation of taxable income, the deductions and exemptions that can be claimed, and the ultimate tax payable.
If a taxpayer inadvertently selects the wrong regime during initial filing, the provision of revised returns under Section 139(5) provides an opportunity to make corrections. A revised return allows the taxpayer to adjust the regime selection or rectify other errors, ensuring accurate reporting and compliance with tax regulations. However, it is essential to note that the final date for filing a revised return is December 31 of the assessment year, beyond which no changes can be made to the original return.
Under the old regime, taxpayers can claim deductions under various sections such as 80C, 80D, 80E, HRA, and others. In contrast, the new regime limits most deductions, except for a few like NPS contribution and employer-provided transport allowance. Taxpayers must ensure their claimed deductions align with the chosen regime to avoid scrutiny, adjustments, or disallowances.
It is crucial to understand that taxpayers cannot switch regimes once the assessment year ends, making the initial choice and any timely revisions critical. Awareness of these deadlines and rules helps prevent penalties, missed deductions, or delays in refunds, while also supporting accurate financial planning and compliance. Proper planning ensures that taxpayers optimize their tax liability without violating provisions of the Income Tax Act.
Using TaxBuddy for Seamless Tax Regime Switching
TaxBuddy simplifies the process of selecting and switching tax regimes. Its AI-driven platform pre-fills income, deductions, and exemptions accurately based on Form 16 and other inputs. Users can instantly see tax calculations under both old and new regimes and choose the one that optimizes tax liability. TaxBuddy also supports filing revised returns if corrections are required, ensuring compliance and avoiding errors that could delay refunds. The platform offers expert guidance, step-by-step assistance, and a mobile app for easy, on-the-go filing.
Common Mistakes to Avoid When Switching Regimes
Switching between the old and new tax regimes requires careful attention to detail, as even small errors can lead to incorrect filings, penalties, or delays in processing refunds. Here are the key mistakes taxpayers should avoid:
Selecting the Wrong ITR Form for Your Income Profile Each ITR form corresponds to a specific type of income and category of taxpayer. Choosing an incorrect form can result in the return being rejected or requiring corrections later. For instance, individuals with income from capital gains or multiple sources must ensure they select the appropriate form (ITR-2, ITR-3, etc.) to reflect their income correctly.
Claiming Deductions Under the New Tax Regime The new tax regime does not allow most exemptions and deductions available under the old regime. Attempting to claim deductions like Section 80C, 80D, or HRA under the new regime can trigger errors or notices from the Income Tax Department. It is essential to understand which benefits are permissible before filing.
Failing to Update Income and Exemption Details When switching regimes mid-year or for a new assessment year, all income sources, exemptions, and investments must be accurately updated. Missing any income, such as freelance earnings or TDS from interest, can cause underreporting, leading to adjustments or penalties later.
Missing the Revised Return Filing Deadline If corrections are required after filing your ITR, it is important to submit a revised return within the prescribed deadlines. Failing to do so can prevent corrections, leaving errors unaddressed and potentially causing notices or interest charges.
Ignoring TDS Credits and Other Adjustments Tax Deducted at Source (TDS) credits, advance tax payments, and other adjustments must be properly reconciled. Ignoring these details can result in incorrect tax computation, delayed refunds, or the requirement to pay additional tax with interest.
Paying careful attention to these aspects ensures accurate filing, reduces the likelihood of notices from the Income Tax Department, and streamlines the overall tax compliance process.
Conclusion
Switching tax regimes can optimize tax liability and improve financial planning. Using tools like TaxBuddy ensures accurate selection, compliance, and a seamless filing experience. For anyone needing assistance in tax filing, it is highly recommended todownload the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Can salaried employees switch from the old regime to the new regime during filing? Yes, salaried employees have the flexibility to choose between the old and new tax regimes while filing their Income Tax Return (ITR). The choice depends on their income, deductions, exemptions, and overall tax-saving strategy. The old regime allows taxpayers to claim deductions like 80C, 80D, and HRA, whereas the new regime offers lower tax rates but fewer deductions. Evaluating which option results in lower tax liability is essential before filing.
Q2. Is it possible to switch regimes after submitting the ITR? Yes, if a taxpayer realizes an incorrect choice of tax regime after filing, they can submit a revised return under Section 139(5). This must be done before the end of the assessment year. Filing a revised return ensures that the correct tax regime is applied, preventing mismatches in TDS, delayed refunds, or notices from the Income Tax Department.
Q3. What deductions are allowed under the new tax regime? The new tax regime significantly restricts deductions and exemptions. However, certain allowances like the employer contribution to NPS (National Pension Scheme), certain specific allowances for transport or EPF, and standard deductions for salaried employees remain applicable. Most deductions available under the old regime, like HRA, 80C, and 80D, are not available.
Q4. How does TaxBuddy assist in switching tax regimes? TaxBuddy simplifies the process of choosing the correct tax regime. It pre-fills income, exemptions, and eligible deductions, then guides taxpayers step-by-step to evaluate which regime is more beneficial. The platform helps calculate tax liability for both regimes, highlights the difference, and ensures accurate filing to avoid errors and delays in refunds.
Q5. Are there penalties for choosing the wrong regime? There is no direct penalty for selecting the wrong tax regime. However, incorrect tax computation may result in delayed refunds, mismatches in TDS, or notices from the Income Tax Department. Timely identification and revision of returns are essential to prevent any unnecessary complications.
Q6. Can businesses switch between regimes? Businesses cannot freely switch between the old and new regimes. The applicable regime depends on audit requirements, turnover, and compliance rules. Companies or professionals with audit obligations must follow specific guidelines under Section 44AB and choose the appropriate regime that aligns with their accounting and reporting structure.
Q7. Is regime selection mandatory every year? Yes, taxpayers are required to choose a tax regime for each assessment year individually. The choice made in one year does not automatically apply to the next year. Taxpayers should review their financial situation annually to determine the regime that optimizes their tax liability.
Q8. What is the deadline for filing a revised return to correct a tax regime mistake? A revised return can be filed anytime before the end of the assessment year, typically December 31 of that year. Filing within this period allows the Income Tax Department to process corrections and ensures that the correct regime is applied for the respective assessment year.
Q9. Can I claim HRA under the new tax regime? No, under the new tax regime, the House Rent Allowance (HRA) exemption is not available. Taxpayers must include HRA in their taxable income. If HRA exemption is a significant part of your deductions, evaluating the old regime may offer more tax savings.
Q10. Does switching regimes impact TDS calculations? Yes, TDS (Tax Deducted at Source) may vary depending on the deductions available under the chosen regime. For example, if you switch from the old regime to the new regime and lose deductions like 80C or HRA, your taxable income increases, potentially increasing TDS. Proper adjustment during filing ensures accurate computation and avoids notices.
Q11. How often can an individual evaluate which regime is better? An individual can evaluate the most beneficial regime every financial year before filing the ITR. Platforms like TaxBuddy provide comparative calculations to help taxpayers see which regime reduces overall tax liability, factoring in deductions, exemptions, and TDS.
Q12. Can revising the ITR after choosing the wrong regime affect refunds or penalties? Filing a revised ITR to correct the tax regime does not attract a penalty if done before the assessment year ends. In fact, revising ensures that the tax liability is accurate, preventing delays in refunds or notices from the department. Using automated platforms like TaxBuddy can make this process seamless and error-free.
Comments