Chose new tax regime by mistake in FY23-24 and want to switch back to old tax regime? Know what ITR rules say

Old vs New Tax Regime: The time for tax planning has started. Soon you will have to provide investment proof for tax saving. At the time of filing income tax return (ITR), the I-T department website will show how much tax you have to pay. But when you file income  tax, the first option that the website asks you, or when you file ITR offline, is to choose between the old tax regime and the new tax regime.

While the old tax regime is said to be beneficial for people with tax saving investments and those who earn more than 10 lakh, the new tax regime is said to be better for people below Rs 10 lakh annual income and those without investments.

While the choice may depend on case to case basis, it is advisable to assess both the options carefully before opting for one.  

Old vs New Tax Regime: What will happen if you have filed in the new tax regime?

If you had mistakenly filed ITR in the new tax regime in 2023 and were not able to avail tax exemption, etc., can you switch to the old tax regime this year?

Or, will the new tax regime become your default tax setting?

Know what rules say and the options you have.

Even after selecting the new tax regime for FY2023-24, you still have the option to avail tax exemption.

You will have to switch the tax regime for this.

Old vs New Tax Regime: Can you switch tax regimes?

Yes, if you are a salaried professional, you can switch tax regime.

This time, the tax regime was also made the default regime, due to which taxpayers were confused about choosing their tax regime.

And after bringing the new tax regime, there was confusion whether the tax regime can be changed again and again?

On this, the Central Board of Direct Taxes (CBDT) had issued a circular on April 13, 2020, in which it was told that those having 'business income' i.e. taxpayers whose income comes from a business, will get this option only once.

So that they can switch tax regime. So what does this mean?

This means that those who do not earn income through business continue to have the option to switch tax regime.

They can switch their regime every year.

Old vs New Tax Regime: What are the rules?

With the new tax regime, there is a rule that those having business income get the opportunity to switch tax regime only once.

They cannot change the tax regime in every new financial year.

But On the contrary, salaried professionals and pensioners have the option to switch their tax regime every financial year.

That means, if you get a salary or are a pensioner and last year, you paid tax in the new tax regime, then this year, you can choose the old tax regime as per your convenience.

After that, you will have the option to choose a new tax regime next year.

That means you can switch your tax regime (New Vs Old Tax regime) every year.

All you have to do is that you have to first tell your company under which regime you will file taxes this year.