ITR Filing FY 2024-25: How to Switch Between Old and New Tax Regimes:

ITR Filing FY 2024-25: How to Switch Between Old and New Tax Regimes When a taxpayer is filing the Income Tax Return (ITR) for the AY 2025-26, they have to make an important decision of choosing between the old tax regime or to go with the new one. The new tax regime is the default option from the FY 2023-24, so if someone wants to continue under the old tax regime, they have to clearly choose it while filing their return. In this article, a complete and simple guide is provided on how taxpayers can switch between the two regimes while filing their ITR for FY 2024-25.

Default tax regime

The new income tax regime is now the default setting. So, if you're filing the ITR and don't select any option, the new regime will automatically apply. If the taxpayer wishes to be taxed under the old regime, then he/she must opt out of the new one.

What happens if the return is filed late

The taxpayers will not be able to choose the old tax regime if the return is filed after the due date. The new tax regime will be applicable automatically in these cases. If the original return is filed within the deadline and later a revised return is submitted, then the taxpayers will still get to switch the tax regime in the revised return.

How to switch while filing ITR

Salaried individuals are also allowed to switch between old and new tax regime every year if they are filing their original income tax return within the due date under section 139(1). Also, in the ITR Form 1 or ITR Form 2, there is a question given as “Do you wish to exercise the option u/s 115BAC(6) of opting out of the new tax regime?” the taxpayers should choose ‘Yes’ if they want to go for the old regime. This option is already filled with ‘No’ means the new regime will apply unless changed.

Rules for business or professional income

Individuals earning income from business or profession do not get the flexibility of switching the regimes every year. Once such a taxpayer opts out of the new regime and chooses the old one, they will be eligible to switch back to the new regime only once in the future. After switching back to the new regime they cannot go back to the old regime once again in the later years. To go out of new regime, taxpayers need to submit Form 10-IEA before the due date of filing the original return.

ITR-4 (SUGAM) and additional disclosures

Those taxpayers who have business or professional income under presumptive taxation and they are using ITR-4, they have to provide more detailed information when opting out of the new regime:

• If they have filed Form 10-IEA last year (FY 2023-24), including the filing date and acknowledgement number.
• If they want to continue opting out for the current year (FY 2024-25).
• If they did not file Form 10-IEA or filed it late last year, they must still choose a regime for the current year and provide the relevant Form 10-IEA details.

• Taxpayers who filed ITR-1 or ITR-2 last year must confirm their choice this year in the ITR Form itself.
• Before choosing between the old and new tax regimes, taxpayers are advised to do a comparison on the basis of their actual income, deductions, and exemptions.

People who have higher tax-saving investments or payments, generally above Rs. 4 lakhs, may find the old tax regime more beneficial. However, taxpayers with business income need to carefully think about their future years’ income plans before making a final decision to switch.