Tax regimes, slabs and rates · Tax Year 2025-26
Regime choice for business income: the one-time switch
If you have business or professional income, you do not pick your tax regime in the return. You do it through Form 10-IEA, by the due date, and the choice stays for later years. Here is how it works and where the one-time limit comes in.
On this page
If you have business or professional income, you do not choose your regime inside the return. You choose it by filing Form 10-IEA on the Income Tax portal, on or before the due date. An opt-out of the new regime holds for later years until a second Form 10-IEA withdraws it, and the law limits how many times you can switch back and forth. This is quite different from a salaried person, who picks the regime afresh in each return.
The rules in this guide are those TaxCare applies for the tax year 2025-26 under the Income-tax Act, 1961. From the tax year 2026-27 the Income-tax Act, 2025 applies and section numbers change; this guide will give the new section and form numbers once TaxCare's 2026-27 rules are signed off.
Who this is for
This guide is for an individual or HUF who has income from a business or profession, including:
- Freelancers and consultants.
- Shop owners and traders.
- Doctors, lawyers, architects and other professionals.
- Someone with a side business in addition to a salary.
If you have only salary, pension, house property and other income, see our guide on old vs new regime. The next section shows how the two cases differ.
Two ways to choose a regime
| No business income | With business or professional income |
|---|---|---|
Where you choose | In the return | By Form 10-IEA on the portal |
When | By the section 139(1) due date, each year | By the section 139(1) due date |
How long it lasts | That year's return | Until you withdraw it with another Form 10-IEA |
Default if you do nothing | New regime | New regime |
How Form 10-IEA works in TaxCare's rules
TaxCare treats the form in this way:
- Opting out of the new regime (to use the old regime): Form 10-IEA filed on or before the section 139(1) due date for that year. If it is filed late, it does not count and the old regime is not available.
- An opt-out filed earlier: If you opted out in an earlier year and have not withdrawn it, the old regime stays in force for this year and the new regime is not open to you.
- Withdrawing the opt-out (to return to the new regime): a second Form 10-IEA. After you do this, the new regime applies.
The due date matters
The Form 10-IEA deadline is the due date for your return. For the tax year 2025-26, the due date is 31-Aug-2026 for a person with business or professional income whose accounts need no audit, and 31-Oct-2026 where audit applies. A person with no business income has 31-Jul-2026.
If the due date has passed and you have not opted out, you cannot use the old regime for that year. A belated return cannot choose it either.
The one-time switch rule
Because the choice holds from year to year, you cannot treat it as a free yearly toggle. Under section 115BAC(6) of the 1961 Act, an opt-out can be withdrawn only once, and not in the same year it was made. After withdrawing, you can never opt out of the new regime again, unless you stop having income from business or profession, in which case you choose in the return each year like anyone else.
A second Form 10-IEA is the only way to withdraw an opt-out, and an opt-out that is not withdrawn carries over.
What changes between the regimes for a business person
Both regimes tax your business profit. The choice changes the slabs and which deductions you can use.
Feature | Old regime | New regime |
|---|---|---|
Income tax slabs | Higher rates, lower exemption | Lower rates, higher exemption |
Chapter VI-A deductions such as 80C and 80D | Allowed | Mostly not allowed |
Standard deduction | ₹50,000 (salary income only) | ₹75,000 (salary income only) |
Rebate under section 87A | Up to ₹12,500 if total income ≤ ₹5,00,000 | Up to ₹60,000 if total income ≤ ₹12,00,000 |
For slab and rebate details, see our guide on old vs new regime. Your business expenses are deducted in working out your profit under either regime. If you claim a special business deduction or allowance, check with a Tax Expert whether it is open under the regime you choose.
What if you also have salary?
A person with both salary and business income uses Form 10-IEA. One regime applies to the whole return. You cannot take the old regime for salary and the new regime for business.
If you use presumptive taxation
Presumptive taxation (section 44AD or 44ADA) still follows the same rule: Form 10-IEA, not the return. ITR-4 asks for the Form 10-IEA details. See our guide on presumptive taxation under section 44AD.
A simple checklist
- Estimate your profit and deductions under both regimes.
- Decide before the due date.
- If you want the old regime, file Form 10-IEA on the portal first.
- If you opted out earlier and want to go back, file the withdrawal form.
- Keep the Form 10-IEA acknowledgement with your return papers.
How TaxCare helps
TaxCare asks about Form 10-IEA when your income includes business or profession, shows whether the old regime is still open to you, and calculates the tax under the regime that applies. It records your Form 10-IEA answers for the return but does not file the form for you; you file it on the portal. A Tax Expert can help you decide which regime suits your numbers.
This guide gives general information and is not professional tax advice.
Questions on this topic
Can a freelancer or business owner choose the regime in the return?
No. With business or professional income, the choice is made by filing Form 10-IEA on the portal, not inside the return.
By when must Form 10-IEA be filed?
On or before the due date for filing the return under section 139(1) for that year.
Does the choice last for future years?
Yes. An opt-out filed once holds for later years until you withdraw it with a second Form 10-IEA.
How is this different for a salaried person?
A person without business income chooses the regime in the return each year, by the due date. A business person uses Form 10-IEA and the choice carries forward.
What happens if I do nothing?
If no Form 10-IEA is filed, the new regime applies by default.
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