How to Change Tax Regime While Filing Your ITR

Your tax regime affects how much tax you finally pay. The new regime offers revised tax slabs, while the old regime allows several common deductions and exemptions.

• The new regime is the default option
• Salaried taxpayers can choose every year
• Old regime allows several common deductions
• New regime offers revised tax slabs
• Business taxpayers follow stricter switching rules
• Form 10-IEA applies to business income

The answer depends on your income and the deductions you can claim.

If you claim deductions for investments, health insurance, House Rent Allowance (HRA), and similar benefits, the old regime may reduce your taxable income more.

If you do not claim many deductions, the new regime may result in a lower tax bill because its slab rates are different.

For example, suppose you earn a salary and invest a large amount in eligible Section 80C options. In that case, compare the tax payable under both regimes instead of looking only at the slab rates.

For AY 2026-27, a resident individual under the new regime can get a Section 87A rebate of up to ₹60,000 if total income does not exceed ₹12 lakh, subject to applicable conditions.

For eligible salaried taxpayers, the ₹75,000 standard deduction can effectively make salary income of up to ₹12.75 lakh tax-free under the new regime in cases where the Section 87A rebate applies.

For income earned in FY 2025-26 and reported in AY 2026-27, the tax slabs are different under the old and new tax regimes.

Old tax regime

For an individual below 60 years of age:

The old regime also allows several common deductions and exemptions, subject to applicable rules.

New tax regime

Under the new regime, the slab structure is the same across age groups. Eligible taxpayers may also get the Section 87A rebate, subject to the applicable income limit and conditions.

Do not choose a regime only by looking at the slab rates. Compare your final tax after considering deductions, exemptions, rebate, surcharge, and cess.

Yes. If you do not have business or professional income, you can generally choose between the old and new regimes every year while filing your ITR within the applicable due date.

This means the tax regime your employer used for Tax Deducted at Source (TDS) does not always have to be your final choice while filing the return.

For example, your employer may deduct TDS using the new regime. If you are eligible and the old regime gives you a lower final tax liability, you can choose the old regime while filing your ITR within the prescribed timeline.

The new regime remains the default if you do not choose the old regime.

The switching rules are stricter if you have income from a business or profession.

If you want to move from the default new regime to the old regime, you need to file Form 10-IEA on or before the due date under Section 139(1).

Once you choose the old regime, you can later return to the new regime. However, this option to return is generally available only once.

After returning to the new regime, you generally cannot choose the old regime again while you continue to have business or professional income.

These restrictions do not apply in the same way to taxpayers who do not have business or professional income.

The old regime allows several deductions and exemptions that can reduce your taxable income.

Common examples include:

• Section 80C: Eligible investments up to ₹1.5 lakh
• Section 80D: Eligible health insurance premium deductions
• HRA: Exemption subject to applicable conditions
• LTA: Exemption subject to applicable rules
• Standard Deduction: ₹50,000 for eligible salary income

The new regime does not allow many common benefits such as Section 80C, Section 80D, and HRA exemption.

However, the new regime still allows certain specified deductions and benefits.

Eligible salaried taxpayers can claim a standard deduction of ₹75,000 under the new regime. Under the old regime, the standard deduction remains ₹50,000.

Want to know about the Highest Taxpayer in India? Check the details here.

The process mainly depends on whether you have business or professional income.

If you do not have business income

You can generally follow these steps:

1. Calculate tax under both regimes.
2. Check your eligible deductions and exemptions.
3. Choose your preferred regime in ITR.
4. Enter the required income details correctly.
5. Check your final tax calculation.
6. Submit and verify your ITR.

Taxpayers without business or professional income do not need to file Form 10-IEA simply to select the old regime.

If you have business income

If you want to opt out of the default new regime and choose the old regime, file Form 10-IEA within the prescribed time.

You must also follow Form 10-IEA requirements if you later exercise the permitted option to return to the new regime.

Keeping your tax information together can help you compare the two regimes correctly.

You may need:

• Form 16 for salary and TDS
• Bank interest and income details
• Capital gains details, when applicable
• Eligible investment and deduction details
• Health insurance payment details
• Home loan documents, where applicable
• Form 10-IEA for eligible business taxpayers

The documents required will depend on your sources of income and the deductions you plan to claim.

Your ITR form depends on your income type and eligibility, not only on the tax regime you choose.

For example, eligible salaried taxpayers commonly use ITR-1 or ITR-2 depending on their income sources.

People with eligible business or professional income generally use ITR-3 or ITR-4, depending on their circumstances.

Simply choosing the old or new regime does not automatically decide which ITR form applies to you.

Small mistakes while choosing a regime can affect your final tax amount.

Watch out for these:

• Using Old Tax Slabs: Check AY 2026-27 rates
• Skipping Tax Comparison: Calculate tax under both regimes
• Missing Form 10-IEA: Business taxpayers may require it
• Missing Filing Deadline: Regime choice has time limits
• Claiming Wrong Deductions: Rules differ between regimes
• Following Employer Choice Blindly: Final ITR choice may differ

Always check your total income, deductions, and applicable rules before submitting your return.

Changing your tax regime can change the amount of tax you finally pay. If you do not have business or professional income, you can generally compare both regimes and choose every year while filing your ITR on time. Business and professional taxpayers have stricter rules and may need Form 10-IEA. Before choosing, compare your income, deductions, exemptions, and final tax under both options. This can help you avoid paying more tax than required.