Tax regimes, slabs and rates · Tax Year 2025-26
Can a salaried person change regime every year?
A salaried person can generally compare the old and new regimes each year when filing. A belated return, a revised return after a belated one, and business income have extra conditions. Know the rules before you choose.
On this page
For a person who has only salary, pension, interest and similar income, the regime is chosen in the return, year by year, so you can compare both regimes each time. The limits are for returns filed late and for people with business or professional income. Confirm the current rule before you rely on switching.
For the tax year 2025-26 the rule is section 115BAC(6) of the 1961 Act. The new regime applies unless you opt out of it. A person without business income opts out in the return filed by the due date, and makes that choice afresh each year.
The two stages
Stage | What happens |
|---|---|
During the year | You tell your employer which regime to use, and TDS on salary follows it |
In your return | You choose the regime for the year and the tax is computed on that basis |
If the two differ, the return settles it: excess TDS is refunded and a shortfall is paid with the return. The employer's choice does not bind you.
Why compare every year
Your income and deductions change. A year with a new home loan, a larger health insurance premium or a big NPS contribution can favour the old regime. A year with few deductions usually favours the new one.
On the 2025-26 rules, the new regime rebate gives zero tax up to ₹12,00,000 of taxable income, and the standard deduction is ₹75,000 against ₹50,000 in the old regime. The old regime allows deductions like 80C up to ₹1,50,000 and 80D, but has higher slab rates.
See old vs new tax regime and rebate under section 87A.
Limits on switching
A belated return
A return filed after the due date is a belated return. In TaxCare's rules it cannot use the old regime, so file on time if you want the old regime.
A revised return
A revised return replaces the original. If the original was belated, the old regime stays closed in the revised return as well. If the original was on time, a revised return filed before the due date can choose either regime. After the due date, a revised return can only keep the regime the original chose.
An updated return
An updated return (ITR-U) is a different kind of filing with its own rules and additional tax. It stands on the original return: it can use the old regime only if the original was filed on time and chose the old regime.
Business or professional income
A person with business or professional income is treated differently under section 115BAC: the regime is not chosen in the return. Such a person leaves the new regime by filing Form 10-IEA on or before the due date of the return. The choice then holds for every later year until a second Form 10-IEA withdraws it, and that withdrawal can be made only once.
How to decide
- Add up your likely old-regime deductions: 80C, 80D, home loan interest, NPS, HRA and others.
- Compute tax under both regimes with the same income.
- Pick the lower tax, but also think about the paperwork. Old-regime deductions need proof.
- Do this every year, because your numbers change.
How TaxCare helps
TaxCare computes your tax under both regimes from your own data and shows the difference, so the choice is yours each year. It warns you when the return you are filing cannot use the old regime, such as a belated return. Nothing is submitted until you approve. Try the income tax calculator.
This guide gives general information and is not professional tax advice.
Questions on this topic
Can a salaried person switch regimes every year?
Generally yes. The choice is made each year in the return. Please confirm the exact rule for the year with a Tax Expert.
Do I have to tell my employer which regime I choose?
Employers deduct TDS on your declared regime. You can still choose differently when you file, and the difference is settled in the return.
Can I use the old regime in a belated return?
In TaxCare's rules, no. A belated return uses the new regime.
What if I have business income as well as salary?
Different conditions apply. A person with business or professional income may have restrictions on switching back. Check with a Tax Expert.
Ready to file your ITR?
TaxCare fetches your AIS and TDS from the Income Tax portal, checks every figure and files the return that saves you the most. 25% off your first filing.