ITR filing due date extended: September 16 is the last chance to opt for the old tax regime

Choosing between the old and new tax regimes often raises doubts about their flexibility. Here’s what salaried employees and business income earners need to know before deciding.

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How many times can a salaried employee switch between the new and old tax regimes? If I opt for the new regime this year, can I revert to the old one next year, and again switch back to the new regime thereafter? Do the provisions for long-term and short-term capital gains remain the same under both regimes? Are there any advantages or disadvantages in the capital gains tax between these two regimes?

Expert Advice: The New Tax Regime is the default regime. Salaried individuals (those without business income) can switch between the old and new regimes every year without any restriction on the number of times they do so. To opt for the old regime, you must exercise this choice while filing your ITR within the due date. If you miss the due date, you will mandatorily fall under the new regime. Importantly, the regime you choose while filing your ITR can be different from the one you declared to your employer for TDS purposes.

For taxpayers with business income, the rule is stricter. Once you opt for the old regime, you must continue with it as long as you have business income. You can switch to the new regime only once, and once you do, you cannot revert to the old regime. However, if you cease to have business or professional income in a particular year, you can again freely choose between the two regimes.