You can switch between the new and old tax regime when you file your income tax return for AY 2026-27. If you have no business or professional income, you simply pick your regime inside the ITR itself. If you have business or professional income, you must file Form 10-IEA on the income tax portal to opt out of the new regime, and you can do this only up to the return due date under section 139(1).
This is a plain how-to on the mechanism of switching. If you are still deciding which regime saves you more, read Old vs New Tax Regime: which one to choose first, then come back here to action your choice.
The new tax regime under section 115BAC(1A) of the Income-tax Act, 1961, is the default regime from AY 2024-25 onward. That means if you do nothing, you are taxed under the new regime. To use the old regime instead, you have to actively opt out, and how you opt out depends entirely on whether you have business or professional income.
This is the single most important rule, so read it carefully.
| Type of taxpayer | How you switch | How often you can switch |
|---|---|---|
| Salaried, pensioner, or anyone with no business or professional income | Choose the regime directly inside the ITR each year. No separate form needed. | Every year. You can flip between old and new from one year to the next, freely. |
| Individual, HUF, AOP, BOI or AJP with business or professional income | File Form 10-IEA on the e-filing portal to opt out of the new regime. | Restricted. Once you opt out and later go back to the new regime, the door to the old regime closes for good, unless your business or professional income ends. |
So a salaried person can pick old this year, new next year, old again the year after. There is no penalty and no form. A business owner does not get that freedom.
Under section 115BAC(6), if you have business or professional income and you opt out of the new regime (choosing old) for a year, you can withdraw that option only once in a later year, that is, return to the new regime once. After that one return, you can never choose the old regime again, except if you stop having any business or professional income. If your business or professional income ceases, you go back to being treated like an ordinary taxpayer who can switch each year.
In plain words: a business taxpayer effectively gets one round trip. Old to new once, then locked into new, unless the business income itself disappears.
Form 10-IEA is the prescribed form to tell the Income Tax Department that a taxpayer with business or professional income wants to opt out of the new regime (choose the old regime), or later withdraw that opt-out (return to the new regime). It is filed online on the e-filing portal.
If you do not have business or professional income, you do not file Form 10-IEA at all. You just select your regime preference while filling the return.
If you have no business or professional income (ITR-1 or ITR-2 type cases):
If you have business or professional income (ITR-3, ITR-4 or ITR-5 type cases):
For both the in-ITR choice and Form 10-IEA, the regime option must be exercised on or before the due date for filing the return under section 139(1). If you file Form 10-IEA after that due date, it is treated as invalid, and you stay on the default new regime for that year. A belated return does not buy you extra time to opt out, so plan around the original due date, not the late-filing window.
At the start of the financial year, your employer asks which regime you want, so they can deduct the right TDS from your salary each month. Tell them clearly. If you say nothing, your employer deducts TDS under the default new regime.
The key thing to understand: telling your employer is not your final tax choice. It only sets your monthly TDS. Your actual, binding regime decision is the one you make when you file your ITR. So if you told your employer “new regime” in April but your numbers later favour the old regime, you can still choose old at filing time, and any excess TDS comes back as a refund (or you pay the small balance, if it is the other way round). Intimating the employer keeps your monthly cash flow accurate; the ITR is where it counts.
A salaried teacher in Pune told her school in April that she wanted the new regime, so her TDS was deducted that way all year. In June, while filing her return for AY 2026-27, she added up her 80C investments, health insurance and home-loan interest and found the old regime saved her more. Because she has no business income, she simply selected the old regime inside her ITR, no Form 10-IEA needed, and claimed a refund for the extra TDS. Next year she can review and switch again if her numbers change.
Yes. Under section 115BAC(1A) the new regime is the default from AY 2024-25. If you do not actively opt out, you are taxed under the new regime.
Yes. If you have no business or professional income, you choose your regime directly inside the ITR each year and can switch freely from one year to the next. No separate form is required.
No. Form 10-IEA is only for individuals, HUFs and similar persons who have income from business or profession. Salaried and other non-business taxpayers select the regime within the return itself.
It is treated as invalid. The option to opt out must be exercised on or before the return due date under section 139(1), or you remain on the default new regime for that year.
No. Under section 115BAC(6), once a business or professional taxpayer opts out and later returns to the new regime, they cannot choose the old regime again, unless their business or professional income ceases.
No. The employer declaration only sets your monthly TDS. Your final, binding regime choice is made when you file your ITR, and any TDS mismatch is settled through a refund or balance payment.
This guide explains the procedure only. For figures specific to your income, use the official tax calculator on the e-filing portal or consult a qualified tax professional.