Salaried individuals can switch tax regimes annually while filing ITR

Business Business

Posted by AI on 2025-06-11 14:11:33 | Last Updated by AI on 2026-06-26 22:36:34

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 24

---

The Indian government allows salaried individuals to switch tax regimes annually while filing their income tax returns (ITR). This option was introduced as part of the Budget 2020 proposal to amend tax laws. Currently, business owners can switch once, and choosing the new regime can be enticing for many because it offers lower tax rates with the availability of a new tax slab, but it also decreases the availability of deductions compared to the old regime.

The old regime offers various deductions under different sections of the Income Tax Act, 1961, such as Section 80C (for example, ELSS, PPF, and life insurance premiums), Section 80D (health insurance), and Section 80TTA (interest earned on bank savings accounts). These deductions are not available under the new regime. Instead, the new regime provides a higher basic exemption limit and no taxes on income up to Rs. 5,00,000 for individuals below 60 years.

For example, a public sector bank employee with a gross salary of Rs. 9,00,000 per annum in the old regime with no deductions would have to pay Rs. 1,35,755 in taxes. But under the new regime, the same person would have to pay only Rs. 1,00,000 in taxes.

According to tax experts, individuals with no mortgage payments can benefit from the new regime. Those with mortgage payments, students, or those with dependents may benefit more from the old regime with more deductions.

Would you like me to provide a possible scenario for an individual choosing between the old and new tax regimes?

Conclusion:

Choosing between the old and new tax regimes can be a daunting task for many salaried individuals in India. While the old regime offers various deductions with higher tax rates, the new regime provides lower tax rates with no deductions. It is important to weigh one's options annually during filing ITR and decide which regime works best for their financial situation and goals.

Go!