FORM 10-IEA FILING REQUIREMENT AND SWITCHING RESTRICTIONS APPLICABILITY ON CHANGING REGIME

Taxation Updates By CA Mayur J Sondagar

What is Form 10-IEA?

• The new tax regime is the default tax regime.
• Those taxpayers willing to choose the old tax regime must choose the option by navigating the required process. 
• Taxpayers who want to opt for the old tax regime must file Form 10IEA.

Purpose of Filing Form 10-IEA

Before going through the process, let’s understand the purpose of Form 10IEA.

• Form 10IEA must be filed by individuals having business income opting for old tax regime. Individuals having business income can exercise this option only once in a lifetime.
• The corresponding choice determines the rules and regulations that would be applicable to the assessee.
• Filling out Form 10-IEA requires individuals to provide all the necessary information like PAN number, assessment year, name, and current status. These details can be used to accurately categorize and identify taxpayer information.

Old Tax Regime V/s New Tax Regime

Under the old tax regime, taxpayers can claim various exemptions and deductions for expenses incurred and investments made, such as deductions under Section 80C, 80D, housing loan interest, HRA, and more. This regime is more beneficial for taxpayers with higher eligible investments and expenses, as it significantly reduces taxable income.

On the other hand, the New Tax Regime offers lower tax rates and a higher basic exemption limit. However, it comes with limited deductions, mainly Section 80CCD(2) for salaried individuals and Section 80JJAA for business income. Therefore, taxpayers with fewer deductions and who prefer simplified taxation with reduced rates should opt for the new tax regime.

However, taxpayers should consider the benefits and limitations of both tax regimes and plan their taxes accordingly.

Who can Switch between Old and New Tax Regime?

Salaried Individuals: Individuals who file ITR1 and ITR2 can switch between the old and new tax regimes annually. They assess their income, investments, and tax liability to choose the tax regime for filing their ITR. If you inform your employer about the tax regime at the beginning of the financial year, you can still change it during the ITR filing. However, if you don’t inform your employer about your choice of tax regime, he will take the new tax regime as the default regime.

Individuals with Business/ Professional Income: These individuals who file ITR 3, ITR 4, and ITR 5 can switch from new tax regime to old tax regimes only once in a lifetime by filling out Form 10-IEA.  If they re-enter to the new tax regime, they cannot switch back to the old tax regime. 

What if Taxpayers don’t Change Tax Regime?

Since the new tax regime is now the default, if taxpayers do not actively choose between the old and new tax regimes, their taxes will automatically be calculated under the new tax regime. However, the Income Tax rules provide flexibility, allowing taxpayers to opt out of the new (default) tax regime and choose the old regime before the last date for filing their ITR for the relevant assessment year.

How Can I Change My Tax Regime While Filing ITR?

Changing your tax regime is simple with a single click. ITR 1 & ITR 2 forms ask the taxpayer “Do you wish to exercise the option u/s 115BAC(6) of opting out of the new tax regime (default is ‘No’)?”. This means that if you click on ‘No’ then you will file your tax return and calculate your tax liability as per the new tax regime, and ‘Yes’ means you have switched from the new tax regime to the old tax regime. 

However, for ITR 3 and ITR 4 to change your tax regime from default regime to old tax regime then you will have to file form 10-IEA on or before the due date, i.e. September 15, 2025.

Form 10-IE vs Form 10-IEA

You might be confused about which form to file for AY 2025-26, is it Form 10-IE or Form 10-IEA. Here is the difference between the forms.

Form 10-IE	Form 10-IEA
Form 10-IE allows taxpayers to opt for the new tax regime.	While Form 10-IEA is filed to opt for the old tax regime.
No longer needed as the new tax regime is the default regime.	However, it is mandatory for the taxpayers filing through ITR-3 or ITR-4 to file for AY 2025-26 if they opt for old regime.

How to File Form-10IEA

From 10IEA can be filed through the following steps:

Step 1: Go to the Income Tax portal and sign in using PAN and password

Step 2: On the dashboard, go to e-file> Income Tax Forms> File Income Tax Forms

Step 3: Search for Form 10-IEA using the search box or scroll through the form list. Click ‘File Now’

Step 4: Choose the relevant assessment year

Step 5: Click on ‘Let’s get started’, after checking the list of required documents.

Step 6: Click ‘Yes’ if you have income from business or profession, choose the due date of filing and click on ‘Continue’

Step 7: Click ‘Yes’ on the confirmation to change from the new tax regime to the old tax regime

Step 8: Verify and confirm the details of the three sections below of Form 10-IEA:

Basic Information

The taxpayer’s name and PAN are pre-filled.

The portal pre-selects the regime based on your previous year’s filing.

If you opt out of the new tax regime for the first time, the opt-out option will be pre-selected. If the system has a previous year form, the re-entering option will be pre-selected. Click on ‘Save’ button.

Additional Information

Provide details related to the IFSC unit if you have any, and click ‘Save’. If you are opting out of the new tax regime, this additional information panel will be greyed out.

Verification and Declaration

Agree to the declared terms and preview all the form entries before submission.

Step 9: Verify using Aadhar OTP, Digital Signature Certificate (DSC), Electronic Verification Code (EVC)

Step 10: Confirm and submit the form after verification.

Step 11: You will receive the acknowledgement message with the acknowledgement number and transaction ID. Save them for future reference.

Who should File Form 10IEA?

• This form is to be filed by taxpayers having income from business or profession i.e. taxpayers filing ITR using ITR-3 or ITR-4.
• Taxpayers who do not have income from business or profession can simply tick the “Opting out of new regime” in the ITR form without the need to file Form 10-IEA. 

Form 10-IEA Due Date

• It is mandatory to submit Form 10-IEA online before the deadline prescribed for filing the income tax return (i.e., 15th September for FY 2024-25). 
• Note that after filing Form 10-IEA, you will get an acknowledgement number. The acknowledgement number is important for tracking the status of Form 10-IEA and referencing it in future communication. 
• An individual needs to mention this number while filing an ITR.

Verification of the Form 10-IEA

• Before an individual goes ahead and submits Form 10-IEA online, there must be thorough verification and validation of the form. 
• The verification can be accomplished using an electronic verification code or a digital signature. 
• Completing the verification process guarantees that the information specified in Form 10-IEA is legitimate and prevents deceitful activities.

Loss in Trading ≠ Loss in Tax Refund.

Why is Form 10-IE discontinued?

• Before the introduction of Form 10-IEA, Form 10-IE was considered valid to choose the new tax regime. However, it has now been discontinued due to the adoption of the new tax regime as the default tax regime.
• The discontinuation of Form 10-IE allows the taxpayer to choose the old tax regime by filing Form 10-IEA.

Things to Remember when Switching Tax Regime

Switching between the tax regimes is a crucial step, as when you change your tax regime, your tax liability and basic exemption limit will change accordingly. So before changing the tax regime, remember to go through these checkpoints. 

1. Know your Tax Regime: It is imperative to completely understand the tax regimes before choosing one. Analyse deductions, exemptions and tax rates to take full advantage of the regime and save tax.
2. Evaluate the tax liability: Understand the tax liability you would have to pay for the income you earn and the deductions available to you. You can calculate your tax liability through our income tax calculator.
3. Effect on Investments and Savings: Consider the effect of the change of regime on investments, savings and your financial planning techniques. You should also keep in mind that some investments cannot be claimed as deductions under the new tax regime. 
4. Documentation: Make sure that all the documents are required to state your income source, deductions and exemptions claimed while filing your tax returns. 
5. Tax Planning: Look forward to your future financial planning, if changing regimes now will affect them or not, consider life events or long-term investments. If your tax planning will align with the tax regime should also be ensured. 

FAQs on New Tax vs Old Tax Regime

The Finance Act 2023 has amended the provisions of Section 115BAC w.e.f AY 2024-25 to make new tax regime the default tax regime for the assessees being Individual, HUF, AOP (not being co- operative societies), BOI or Artificial Juridical Person. However, the eligible taxpayers have the option to opt out of new tax regime and choose to be taxed under old tax regime. The old tax regime refers to the system of income tax calculation and slabs that existed before the introduction of the new tax regime.

In case of “non-business cases“, option to choose the regime can be exercised every year directly in the ITR to be filed on or before the due date specified under section 139(1).

In case of taxpayers having “income from business and profession” and who want to opt out of new tax regime, the assessee would be required to furnish Form 10-IEA on or before the due date u/s 139(1) for furnishing the return of income. Also, for the purpose of withdrawal of such option i.e. opting out of old tax regime shall also be done by way of furnishing Form No.10-IEA. New tax regime is the default tax regime. However, taxpayers can opt for the old regime.

New vs. Old Tax Regime> FAQs

1. What is the difference between the old and new tax regime?

Ans: The tax slabs and rates are different in old and new tax regimes. Various deductions and exemptions are allowed in Old tax regime. The new regime offers lower rates of taxes but permits limited deductions and exemptions.

2. Which is better between the old tax regime and the new tax regime?

The option to choose between two regimes may vary from person to person. It is advisable to do a comparative evaluation and analysis under both regimes and then choose as per requirement. Taxpayers can broadly estimate and compare tax liability under the new and the old tax regime using Income and Tax Calculator on the Income Tax Portal.

3. Is it necessary for the employee to intimate the tax regime to the employer?

Yes, the employee has to intimate the employer regarding his intended tax regime during the year. If the employee does not make an intimation, it shall be presumed that the employee continues to be in the default tax regime and has not exercised the option to opt out of the new tax regime. Thus, the employer shall deduct tax in accordance with the rates provided under section 115BAC.

However, the intimation made to the employer would not amount to exercising the option in sub- section (6) of section 115BAC for opting out of the new tax regime. The employee shall be required to do so separately before the due date specified under section 139(1) for filing of return of income.

4. I am a salaried taxpayer. Can I claim HRA exemption in the new regime?

Under the old tax regime, House Rent Allowance (HRA) is exempted under section 10(13A) for salaried individuals. However, this exemption is not available in the new tax regime.

5. Am I eligible for Rs. 50,000 standard deduction in the new tax regime?

Yes, Standard deduction of Rs.50,000 or the amount of salary, whichever is lower, is available for both old and new tax regimes from AY 2024-25 onwards.

6. In the new tax regime can I claim deductions under chapter-VIA like section 80C, 80D, 80DD, 80G etc. while filing the ITR for AY 2024-25?

In new tax regime, Chapter-VIA deductions cannot be claimed, except deduction u/s 80CCD(2)/80CCH/80JJAA as per the provision of Section 115BAC of the Income Tax Act, 1961. In case, taxpayer wants to claim any deductions (as applicable), then taxpayer needs to choose the old tax regime by selecting “Yes” option in ITR 1 / ITR 2 (or) “Yes, within due date” option in ITR 3 / ITR 4 / ITR 5 in the field provided for “opting out option” under Schedule ‘Personal Information’ or ‘Part- A General’ in the respective ITR.

7. Can I claim deduction of Interest on borrowed capital of Rs. 2,00,000/- for self occupied property under Income from House Property in the new tax regime?

In the new tax regime, “Interest on borrowed capital for Self-occupied property” is not allowed as a deduction from Income from House property as per the provision of Section 115BAC of the Act, 1961. In case, the Taxpayer wants to claim deduction of interest on borrowed capital for SOP, then taxpayer must choose ‘Old Tax Regime’ by selecting “Yes” in ITR 1 / ITR 2 or “Yes, within due date” option in ITR 3 / ITR 4 / ITR 5 in the field provided for “opting out option” in the ITR Form.

8. I am a senior citizen. In the old tax regime there are special advantages in tax rates for senior citizens. Are there any such advantages in new tax regime?

In the old tax regime , the basic exemption limit for senior citizens is Rs. 3,00,000/- and for super senior citizens, it is Rs. 5,00,000/-. In the new tax regime, no income tax is payable upto the total income of Rs. 7 lakh.

9. Is there any difference in tax rebate under section 87A in old and new tax regime?

In the old tax regime in case of a resident individual, whose total income does not exceed Rs. 5,00,000/- there is rebate of 100 percent of income tax subject to a maximum of Rs. 12,500/.

In the new tax regime, w.e.f 01-04-2024, in case of a resident Individual, the rebate will be applicable on total income chargeable to tax under subsection (1A) of section 115BAC as under:

(a) where such total income does not exceed seven hundred thousand rupees, a deduction from the amount of income-tax (as computed before allowing for the deductions under Chapter VIII) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent of such income-tax or an amount of twenty-five thousand rupees, whichever is less;

(b) where such total income exceeds seven hundred thousand rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of seven hundred thousand rupees, a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees.

10. While filing ITR for FY 2023-24 (AY 2024-25), I want to opt for the old tax regime instead of the default new tax regime, should I file Form 10-IEA before filing his income tax return (ITR)?

Form 10-IEA is a declaration made by the return filers for choosing the ‘Opting Out of New Tax Regime’. An Individual, HUF, AOP (not being co-operative societies), BOI or Artificial Juridical Person with business or professional income must submit Form 10-IEA if they wish to pay income tax as per the old tax regime. On the other hand, taxpayers who do not have income from business or profession can simply tick the “Opting out of new regime” in the ITR form without the need to file Form 10-IEA. Simply put, only those who file ITR-3, ITR-4 or ITR-5 have to submit Form 10-IEA if they have business income (other than coop societies). Individuals and HUFs filing their returns in Forms ITR-1 or 2 are not required to submit Form 10-IEA.

11. I am filing ITR in new regime for AY 2024-25. Can I switch between old and new tax regime in the next years?

An Individual, HUF, AOP (not being co-operative societies), BOI or Artificial Juridical Person with business or professional income will not be eligible to choose between the two regimes every year. Once they opt out of new tax regime, they have only one chance for switching to new regime. Once they switch back to the new regime, they won’t be able to choose old regime anytime in future. An individual with non business income can switch between the new and old tax regimes every year. Within the same year, again it is emphasized that the choice of old tax regime can be made only before the due date of filing the return u/s 139(1) of I T Act.

12. I am having business income and have opted in and opted out from the new regime in the previous years. So, will I be in old regime for the AY 2024-25?

Please note that new tax regime is default regime for AY 2024-25. Any actions in any previous years with respect to choice of regimes will not be applicable from AY 2024-25. You are required to submit Form 10-IEA again in case you want to opt for the old regime.

13. I have business income, I have wrongly filed Form 10-IEA but want to file the return under new tax regime. As there is no option to withdraw Form 10-IEA in that case whether my return can be filed under new tax regime?

Once Form 10IEA is filed for AY 2024-25, then it cannot be revoked / withdrawn in same AY. If you wish to re-enter into new tax regime then you can file Form 10IEA for withdrawal option in the next assessment year. Again it is emphasised that that the choice of old tax regime can be made only before the due date of filing the return u/s 139(1) of IT Act.

14. I am filing ITR-5. I want to opt out of new tax regime? Whether Form 10-IFA or Form 10- IEA would be applicable to me?

Form 10-IEA is applicable to AOP’s (other than Co-operative society) or BOI or AJP, who are filing return of Income in ITR-5 for AY 2024-25.

Form 10-IFA is applicable to new manufacturing co-operative Societies resident in India filing ITR 5, if they wish to avail New Tax Regime under Section 115BAE for AY 2024-25.