ITR 2024: Old tax regime still an option; here’s how to switch while filing your income tax returns

In the Union Budget 2024, the central government has introduced significant changes to the new tax regime, including more slab relaxations and an increase in the standard deduction from ₹50,000 to ₹75,000.

Despite these, many taxpayers may still prefer the old tax regime due to the various deductions and exemptions it allows.

Given that the new tax regime is the default for FY 2023-24, taxpayers wishing to file their income tax returns under the old regime must first opt out of the new tax regime.

Provisions for switching to the old tax regime

• Form 10-IEA: Taxpayers who earn income from business or profession must submit Form 10-IEA if they intend to pay tax under the old tax regime. Therefore, individuals filing ITR-3, ITR-4, or ITR-5 with business income (excluding cooperative societies) need to submit this form.

• Tick opt-out option: Taxpayers who don’t have income from business or profession are not required to file Form 10-IEA. Instead, they can choose the “opting out of new regime” option in their ITR form. This applies to individuals and Hindu Undivided Families (HUFs) who file returns using ITR-1 or ITR-2.

• Flexibility for non-business income: Taxpayers with non-business income have the flexibility to switch between the new and old tax regimes every year. However, the choice to opt for the old tax regime must be made before the due date of filing the return.

• One-time switch for business income: Taxpayers with business or professional income are allowed to switch between the two regimes only once. If they choose to opt out of the new tax regime, they have only one chance to switch back to the new regime in the future.

The deadline for filing ITR for FY 2023-24 is July 31, 2024. Ensure that you choose between the two regimes wisely before filing the ITR.