ITR Filing AY 2025-26: As many as 2.47 crore income tax returns (ITRs) have been filed for the financial year 2024-25. Of these, nearly 1.14 crore returns have been processed by the Income Tax Department. Going by what we saw in the previous year, around 75% taxpayers are yet to file their returns.
Every year, many taxpayers find themselves in a fix about how to change their income tax regime, as they feel that switching could help them save money on taxes. This is especially true for salaried individuals, who are asked to choose a tax regime at the beginning of the financial year. Based on their choice, they declare their investments to their employers. At the end of the year, they are again asked to submit proof of the investments declared earlier.
Filing your tax return this year? Head to our detailed ITR Guide for everything you need to know.
Old or new? Many people want to change their tax regime while filing ITR, but they do not know exactly how to do it.
The government has made the new tax regime the default from the financial year 2023-24, that is, if you do not choose anything, then your ITR will be processed according to the new regime. But the good thing is that salaried taxpayers have the option to choose the old or new regime while filing ITR.
What is the difference between the old and new regime?
The old tax regime gives you the benefit of many exemptions and deductions (like 80C, 80D, HRA, LTA etc.), while the new tax regime comes with a lower tax slab rate but almost no exemptions. That is, if you make more investments and tax savings, then the old regime can be beneficial for you, whereas if your tax savings are less, then the new regime can prove to be better.
How to change tax regime while filing ITR?
Step-by-step guide:
Select ITR form:
First of all, choose the right ITR form (like ITR-1 or ITR-2) as per your income and profile.
Go to the e-filing portal:
Login to https://www.incometax.gov.in/
Select the file new return option:
Go to the ‘e-File’ menu and click on ‘Income Tax Return’ > ‘File Income Tax Return’ option.
Select Assessment Year:
Select Assessment Year 2025-26 (which is for FY 2024-25).
Tax Regime option will appear:
While filling the form, you will find a section asking which tax regime you want to choose – new or old.
Select regime and proceed:
Here you can switch from old to new or new to old regime. Be careful while making this choice, as once submitted, it cannot be changed.
Rules are different for businessmen and freelancers
For non-salaried class i.e. individuals who are freelancers or businessmen, change of tax regime is not allowed every year. They have to continue with the same regime once they make the choice, unless they seek permission for change through Form 10-IE/10-IEA.
Do not depend on the default regime
If you make planned investments for tax savings, it is important that you choose the old regime. Many taxpayers think that whatever their employer chooses will be final, but the truth is that you can change your employer’s selection while filing ITR.
The new portal also has the facility
It has become easier to fill in information related to the tax regime on the new e-filing portal of the Income Tax Department. The option to choose the tax regime is visible on the form screen itself.
Suggestions for small taxpayers
If your annual income was up to Rs 7 lakh for FY 2024-25 and you have not done any tax saving, then the new tax regime may be better for you because there is no tax on income up to Rs 7 lakh. But if you have taken exemptions like 80C, 80D and house loan, then the total tax may be less than the old regime.
Conclusion: Choose wisely
You get the opportunity to change your tax regime only once a year while filing ITR. So, before taking any decision regarding this, compare your total tax benefits in both the regimes. If needed, consult a tax expert.