Can You Switch Tax Regime During ITR Filing?

ITR Season 2025 is already here, with over 12 thousand ITRs already submitted. However, many salaried individuals are still waiting for their Form 16 from their employers so they can get started with ITR filing. Many taxpayers are confused about whether they can switch tax regimes while filing the ITR. The answer depends on a few things, such as your income type and how you’ve managed your taxes for the financial year.

Who can Switch Tax Regime?

Salaried individuals and pensioners can opt for the regime during ITR filing every year. If taxpayers have not updated their employer about their preferred regime during the year, or if the taxpayer has changed their mind now, they can still switch regimes while filing their return. However, there are some limits when it comes to changing regimes for businesses or professionals.

Old Tax Regime Vs New Tax Regime

Taxpayers wish to switch tax regimes when they see that the other regime reduces their tax liability. Both the new and the old regimes have their own benefits. The new tax regime is the default and offers low tax rates but does not offer various deductions, including HRA, 80C, etc. On the other hand, the old tax regime allows taxpayers to claim deductions under various sections.

Which Taxpayers can Switch Annually?

• Salaried individuals and pensioners: They can change their tax regimes every year.
• Business owners or Self-employed: They can switch between the old and new regimes only once. So, if they choose the new regime and later opt out of it, they cannot switch back to the old regime again in future years unless they stop having business income. This is governed by Section 115BAC of the Income Tax Act, 1961.

How to Switch Tax Regime During ITR Filing?

Here are the steps to change the tax regime on the income tax porta for Taxpayers having Business Income:

• Step 1: Visit the income tax portal at https://www.incometax.gov.in
• Step 2: Log in to the portal.
• Step 3: Navigate to e-file and then click on Income Tax Return.
• Step 4: Click on File Income Tax Return and choose the relevant assessment year.
• Step 5: Select the online mode
• Step 6: At the ‘Personal Information‘, you will be asked a question as “Are you opting for the new tax regime under section 115BAC?“
• Step 7: Choose Yes (for new regime) or No (for old regime).
• Step 8: If you choose ‘Yes‘, you may need to file Form 10IEA for the assessment year 2024-2025.
• Step 9: Continue filing the ITR.

Taxpayers who do not have business income must mention in their ITR forms (ITR-1 and ITR-2) which regime they wish to opt for.