ITR Filing: Can you switch between the old and new tax regimes when your source of income changes?

Switch between old and new tax regimes

Current income-tax provisions make the new regime the default, but the rules differ depending on whether the taxpayer has business or professional income. Today's Ask Wallet Wise answers how regime-switching works under different income scenarios.

Moneycontrol’s Ask Wallet Wise initiative offers expert advice on matters of personal finance and money. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address your queries.

I have professional income for the financial year 2024–25 and opted for the old tax regime, as it allowed me to save a significant amount of tax. However, in the current financial year 2025–26, I will not have any professional income since I have taken up employment and will only have salary income. Will I be able to choose the new tax regime for the current year while filing my Income Tax Return (ITR) next year?

Expert Advice: As per current income-tax provisions, the new tax regime is the default option. If you wish to opt for the old tax regime and you have income under the head “Profits and Gains of Business or Profession”, you are required to file Form 10-IEA by the due date.

If you do not have income taxable under the business head, you need not file this form. Instead, you can simply exercise the option to choose the old tax regime while filing your ITR by the due date. Please note that if you miss the due date for filing your ITR, you will mandatorily fall under the new tax regime, with no option to choose the old one.

Taxpayers without business income can toggle between the old and new regimes each year. However, for those with business income, the flexibility is limited: once you opt out of the old regime, you cannot revert to it as long as you continue to have business income. If, however, in a particular year you do not have business income, you may switch to the new regime, and if business income arises again in the future, you may once again opt for the old regime.

Since you will not have any income under the head “Profits and Gains of Business or Profession” in the current year, you can opt out of the old regime and file your ITR under the new regime next year. You will still retain the option to revert to the old tax regime in case you have professional income in the future.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.