The deadline for submitting the Income Tax Return (ITR) for the Assessment Year (AY) 2026–2027 has arrived, following several weeks of speculation. Although the deadline for reporting ITR-1 or ITR-2 with non-audit cases is July 31, 2026, taxpayers commonly question if they can switch between the old and new tax regimes while filing their ITR. If so, how many times?
Salaried taxpayers and other individuals without business or professional income can switch between the old and new tax regimes while filing their ITR, irrespective of the regime communicated to the employer at the beginning of the financial year.
“The employer’s choice is only for monthly TDS deduction, but the final tax regime for the return can still be chosen at the time of filing, provided the return is filed within the due date. In this category, the choice can generally be made every year, so the taxpayer can compare both regimes afresh each assessment year and pick the one that gives the lower tax outgo,” said CA Chandni Anandan, Tax Expert at ClearTax.
“For taxpayers who have business or professional income, the rule is more restrictive. They do not have the same free annual flexibility, and once they choose the old regime, they can opt back to the new regime only once, and this option is not available later. In practical terms, business taxpayers should treat the regime choice as a more binding decision and check the applicable Form 10-IEA requirements before filing,” Anandan further clarified.
A taxpayer should switch only after comparing the final tax outcome under both regimes. If the old regime gives a lower liability because of deductions like HRA, 80C, or home loan interest, it may be preferable. If the taxpayer does not have enough deductions or wants simplicity and lower slab rates, the new regime may work better.
“However, there are restrictions on switching back to the old tax regime after opting for the new regime, especially for taxpayers with business or professional income. Once such taxpayers opt into the new regime and move away from the old one, the ability to switch back is available only once, subject to the applicable rules. Salaried taxpayers, however, usually have annual flexibility,” stated Anandan.
Before choosing between the old and new tax regimes, taxpayers should compare total taxable income, deductions available, exemptions lost under the new regime, and the final tax payable after rebates and cess. They should also consider salary structure, HRA, LTA, Chapter VI-A deductions, home loan interest, and whether they prefer lower tax rates or higher deductions.
The old regime allows many deductions and exemptions such as HRA, LTA, 80C investments, 80D health insurance, home loan interest in eligible cases, and several allowances. The new regime offers lower rates but removes most of these benefits, though a few items like the standard deduction still remain available.
The most common mistakes are assuming the employer’s regime choice is final, not calculating both regime outcomes, ignoring the loss of deductions in the new regime, and forgetting that business income can restrict flexibility. Another common error is filing late and assuming the regime can still be chosen freely.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.
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