How Many Times Can You Switch Income Tax Regimes? Understand New vs Old to Avoid Confusion During ITR Filing

While filing your Income Tax Return (ITR), taxpayers are often confused about whether they can switch between the old and new tax regimes—especially if they’ve already selected one at the beginning of the financial year. Let’s understand how flexible the tax regime system is and how you can make the most beneficial choice without legal trouble or financial loss.

Can You Change the Tax Regime at the Time of Filing ITR?

Yes, if you’re a salaried employee, you can change your tax regime at the time of ITR filing—even if you had informed your employer of a different choice earlier in the year. For example, if you had chosen the old regime in April but now wish to switch to the new one because it offers better savings, you are free to do so while filing your return.

Salaried Individuals: Full Flexibility Every Year

From FY 2023-24 onward, the new tax regime is the default option. This means if you don’t explicitly choose a regime, your ITR will be considered under the new system.

The good news for salaried taxpayers is that you can switch between the old and new regime every year depending on which one offers better tax benefits.

What If Your Employer Already Deducted Tax?

In most cases, once you choose a regime, your employer starts deducting TDS (Tax Deducted at Source) accordingly. But don’t worry:

• If excess tax was deducted, you can claim a refund.

• If less tax was deducted, you will have to pay the difference along with some interest while filing your ITR.

Also, note that your Form 16 (issued by your employer) may reflect the regime you originally opted for, not the one you choose while filing. So, always keep relevant documents ready in case the Income Tax Department asks for clarification.

What About Business Owners and Freelancers?

The rules are more stringent for those with business or professional income. Such taxpayers are allowed to switch to the old regime only once. Once they return to the new regime, they cannot go back to the old one unless their business or professional income ceases completely.

What Should You Do Before Filing ITR?

Before finalizing your tax return:

1. Calculate your total tax liability under both regimes—old and new.

2. Compare the tax amount and see which regime saves you more.

3. Choose the regime that benefits you the most.

4. The system will automatically adjust your TDS and inform you whether you're eligible for a refund or need to pay additional tax.

 Final Takeaway

• Salaried taxpayers enjoy the flexibility to switch tax regimes every financial year.

• Business owners or professionals can switch from new to old regime only once, with no return unless they stop their business activities.

• Smart tax planning involves calculating your liabilities under both regimes before filing and selecting the one with minimum tax burden.