Old Vs New Tax Regime Part 3

By | October 11, 2025
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Old Vs New Tax Regime Part 3

  • Video Series Overview [00:06]: This is Part 3 of a three-part video series comparing the Old and New Tax Regimes, focusing on Frequently Asked Questions (FAQs). Part 1 covered an overview, tax slabs, and benefits. Part 2 discussed the procedure for opting out of the New Tax Regime.

 

Frequently Asked Questions (FAQs) on New Tax Regime

 

  • 1. Is it necessary for the employee to specify the tax regime to the employer every year? [00:46]
    • Yes, if an employee wishes to choose the Old Tax Regime, they must specify this to their employer.
    • The New Tax Regime is the default tax regime, so it does not need to be specified to the employer.
    • However, while filing the Income Tax Return (ITR), anyone can switch the regime as per their preference and choose whichever is more beneficial.
  • 2. Who cannot switch between the regimes every year? [01:15]
    • Taxpayers with income from business or profession are NOT eligible to switch income tax regimes every year.
    • However, if you have income from sources other than business or profession, you can switch the regime every year.
  • 3. Can a taxpayer having income from business and profession re-enter the New Tax Regime for Assessment Year 2025-26 if they already opted out in Assessment Year 2024-25? [01:34]
    • Yes, if a taxpayer opted out of the New Tax Regime in AY 2024-25 by filing Form 10-IEA and wishes to re-enter for AY 2025-26, they can file Form 10-IEA again for AY 2025-26 with the “re-enter into the New Tax Regime” option.
    • Important Note: Once this option for re-entering the New Tax Regime is exercised, the option for changing the tax regime will no longer be available for any subsequent assessment year.
  • 4. What is the standard deduction available in computing income chargeable under “Salaries” if a person has opted for the New Tax Regime? [02:26]
    • Effective from Assessment Year 2025-26, if income under “Salaries” is computed under the New Tax Regime, a standard deduction of ₹75,000 is allowed (instead of ₹50,000 applicable under the Old Tax Regime).
  • 5. In the Old Tax Regime, senior citizens benefit from special tax rate advantages. Are there similar benefits in the New Tax Regime? [02:53]
    • In the Old Tax Regime, the enhanced basic exemption limit is ₹3 lakhs for senior citizens and ₹5 lakhs for super senior citizens.
    • In the New Tax Regime, the basic exemption limit (₹3 lakhs for AY 2025-26 and ₹4 lakhs for AY 2026-27) is uniform for all individuals, irrespective of their age.
  • 6. Is HRA (House Rent Allowance) exemption available in the New Tax Regime? [03:32]
    • No, HRA exemption under Section 10(13A) is not allowed in the New Tax Regime.
    • Most exemptions eligible in the Old Regime are disallowed in the New Regime, such as Leave Travel Allowance, Entertainment Allowance, Professional Tax, various allowances under Section 10(14) (like traveling, transfer, helper, research, uniform allowance, etc.).
  • 7. From which assessment year is Form 10-IEA applicable, and in which cases will Form 10-IEA be applicable? [04:05]
    • Form 10-IEA (notified by Notification No. 43/2023 dated June 21, 2023) is applicable for Individuals, HUFs, Associations of Persons (other than cooperative societies), Bodies of Individuals, or Artificial Juridical Persons from Assessment Year 2024-25 onwards for opting for the New Tax Regime.
    • Form 10-IFA (notified by Notification No. 83/2023 dated September 29, 2023) is applicable for Cooperative Societies from Assessment Year 2024-25 onwards for opting for the New Tax Regime.
  • 8. Is Form 10-IE, submitted earlier for opting into the New Tax Regime, discontinued? [04:46]
    • Yes, Form 10-IE, previously utilized for opting into the New Tax Regime, has been phased out. It was used until Financial Year 2022-23. Its discontinuation aligns with the New Tax Regime being the default regime.
    • Therefore, there is no requirement to file a form for opting into the New Tax Regime for Individuals, HUFs, AOPs (excluding cooperative societies), BOIs, and AJPs from Assessment Year 2024-25 onwards.
  • 9. While filing Form 10-IEA, if I select ‘No’ to “Do you have income under the head Profits and Gains of Business or Profession during the Assessment Year?”, I am unable to proceed further. What should I do? [05:24]
    • If you do not have any business income and are required to file ITR-1 or ITR-2, there is no need to file Form 10-IEA to opt out or re-enter the New Tax Regime.
    • In such cases, the option to choose the tax regime can be exercised while filing the respective Income Tax Return form (ITR-1 or ITR-2) on or before the due date specified under Section 139(1).
  • Choosing the Most Beneficial Tax Regime [06:01]: To determine the most beneficial tax regime, you can use the Income Tax Calculator available on the Income Tax Portal in the Quick Links section. This will help you calculate tax liability under both regimes and compare them.

For more details, visit www.incometax.gov.in or contact their helpline numbers.