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Personal Finance News

Do you need to opt for the New Tax Regime again in Income-Tax Bill 2025?

rajeev kumar
By Rajeev Kumar

3 min read | Updated on February 14, 2025, 12:02 IST

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SUMMARY

The transition from the old Income-Tax Act, 1961, to the new Income-Tax Bill, 2025 will be seamless. Moreover, all the rules related to income-tax return (ITR) filing will remain the same as earlier, according to to the Central Board of Direct Taxes (CBDT),

new tax regime in new income tax bill 2025

Currently, taxpayers can file their returns under the new and old tax regimes. | Image source: Shutterstock

No. Taxpayers will not have to opt for the new tax regime again in the new Income-Tax Bill 2025 if they have already done so in the Income-Tax Act 1961.

The current rules for choosing a tax regime will continue to apply under the new Income Tax Bill 2025.

According to the Central Board of Direct Taxes (CBDT), the transition from the old Income-Tax Act, 1961, to the new Income-Tax Bill, 2025 will be seamless. Moreover, all the rules related to income-tax return (ITR) filing will remain the same as earlier.

"No, all the rights and duties of taxpayers will continue to remain intact. In fact, the transition is expected to be seamless," the CBDT said in a set of frequently asked questions (FAQs) released after the tabling of the new bill in the parliament on Thursday (February 13, 2025).

What are the current rules for tax regime selection?

Currently, taxpayers can file their returns under the new and old tax regimes. Both regimes have their pros and cons. Taxpayers can select either one based on their circumstances. However, there are some conditions when it comes to selecting a tax regime:

  • Taxpayers having business or professional income can not choose between the two regimes every year. Once they opt out of the new tax regime, they have only one chance of switching to the new regime. Once they switch back to the new regime, they can’t go to the old regime again.

  • An individual with non-business income such as a salaried employee can switch between the new and old tax regimes every year. However, the choice of the old tax regime can be made only before the due date of filing the income-tax return.

The above rules will continue to remain in force under the new income-tax bill also.

The new income-tax bill is proposed to be effective from April 1, 2026. However, the bill may undergo some changes during its passage in the parliament.

What's different about the new tax regime in the new bill?

In the new income-tax bill, there are no policy changes related to the new tax regime. However, the following approach has been taken to make the provisions of the new regime easy to understand, according to CBDT.

  • The new tax regime is a separate part of the new income-tax bill.

  • This part on the new tax regime is dedicated to the special rate of taxation for individual taxpayers, domestic companies, cooperative societies, and other eligible taxpayers.

  • Redundant provisions have been removed.

  • Tables have been provided to do away with multiple explanations and provisos.

  • Various special types of income that attract special rates have been brought together in the new bill.

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About The Author

rajeev kumar
Rajeev Kumar is a Deputy Editor at Upstox, and covers personal finance stories. In over 11 years as a journalist, he has written over 2,000 articles on topics like income tax, mutual funds, credit cards, insurance, investing, savings, and pension. He has previously worked with organisations like 1% Club, The Financial Express, Zee Business and Hindustan Times.

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