ITR Filing Alert: Why Form 10-IEA Is Crucial When Switching Tax Regimes to Avoid Lower Refunds

By Siddhi Jain | Sep 8, 2025, 11:26 IST

As the last date for filing Income Tax Returns (ITR) for FY 2024–25 draws near, taxpayers must carefully choose between the old tax regime and the new tax regime while filing their returns. However, many filers are unaware that if you fall under certain categories and fail to submit Form 10-IEA, your return will automatically be processed under the new tax regime. This could change your tax liability and even reduce your refund.

Let’s break down what Form 10-IEA is, who needs it, and why it matters for your ITR filing.

What Is Form 10-IEA?

Form 10-IEA is a declaration form required by taxpayers who earn income from business or profession and want to opt into the new tax regime under Section 115BAC.

If you are filing ITR-3 or ITR-4, this form becomes mandatory.
If you skip it, the Income Tax Department will automatically shift you to the new regime, regardless of your preference.

This means that even if you had planned to take deductions and exemptions available under the old regime, you may lose those benefits if the form is not submitted on time.

Who Needs to File Form 10-IEA?

Not Required

ITR-1 (Sahaj): For salaried individuals with annual income below ₹50 lakh, income from one house property, or interest income. Business or capital gains income is not allowed here.
ITR-2: For individuals with capital gains, multiple house properties, or foreign assets. Business and professional income is not included.

👉 Taxpayers in these categories can switch between old and new regimes directly while filing their return. They don’t need Form 10-IEA.

Required

ITR-3: For individuals earning from business or profession. Partners in firms also fall under this category.
ITR-4 (Sugam): For taxpayers with income up to ₹50 lakh under presumptive taxation (Sections 44AD, 44ADA, 44AE). Applicable to individuals, Hindu Undivided Families (HUFs), and firms (except LLPs).

👉 Taxpayers in these categories must file Form 10-IEA if they want to move to the new tax regime. Otherwise, they will automatically be placed under the default new regime.

How to File Form 10-IEA Online

Filing this form is straightforward if you follow these steps:

Visit the Income Tax e-filing portal and log in using your PAN and password.
Go to the e-File section and select Income Tax Forms.
Choose Form 10-IEA from the available list.
Enter accurate details about your income, exemptions, and deductions.
Submit the form and complete the process through e-Verification.

⚠️ Important: The form must be filed within the due date under Section 139(1), otherwise it will not be valid.

Why Form 10-IEA Matters for Refunds

Failing to file Form 10-IEA can directly impact your refund amount.

For example, as reported by Times of India, a taxpayer named Alka Sharma from Noida planned her return under the old regime. However, because she did not file Form 10-IEA, her return was processed under the new regime. As a result, instead of receiving a refund of ₹57,000, she only got ₹42,000 — a significant shortfall.

This case highlights why taxpayers must be cautious and complete the correct forms when switching tax regimes.

Old vs New Regime: What You Should Know

Old Tax Regime: Offers higher tax rates but allows multiple deductions and exemptions (HRA, 80C, 80D, etc.).
New Tax Regime: Lower tax rates but minimal deductions.

For ITR-1 and ITR-2, switching is as simple as selecting the preferred option in the return form. But for ITR-3 and ITR-4, the declaration through Form 10-IEA is mandatory.

Also note: Once you opt into the new regime for business/profession income, you cannot switch back to the old regime in subsequent years.

Final Takeaway

If you are a taxpayer with business or professional income, filing Form 10-IEA is not optional—it’s essential. Without it, your return will be locked into the new tax regime, which could reduce your refund or increase your liability.

With the ITR filing deadline approaching, ensure you:

Choose your tax regime carefully.
File Form 10-IEA if you belong to ITR-3 or ITR-4 categories.
Double-check your filing before submission to avoid costly mistakes.

Taking these steps will help you maximize your refund and stay compliant with tax regulations.