Form 10-IEA: How Non-Salaried Taxpayers Opt Into the Old Regime

Since FY 2023-24, the new tax regime has been the default regime for every taxpayer in India. That means if you file your return and do nothing to indicate otherwise, you are taxed under the new regime automatically. If you want to be taxed under the old regime instead — because your HRA, home loan interest, 80C, and 80D claims genuinely work out cheaper for you — you have to actively say so. Nothing about this default changed with the Income-tax Act, 2025; only the section numbers were renumbered.

How you say so, however, depends entirely on one thing: whether you have business or professional income. That single distinction changes the entire process — how often you can switch, what form (if any) you need to file, and, most importantly, how much freedom you retain to change your mind in future years.

If your only income is salary — no business, no professional income (freelancing, consulting, or running a proprietorship all count as business or professional income) — opting for the old regime is simple. You do not file any separate form. You either indicate your regime choice to your employer at the start of the financial year, so that TDS is deducted accordingly, or you select the regime directly on your ITR form when you actually file your return, or both.

This is a year-to-year decision with no strings attached. You can choose the old regime one year, switch to the new regime the next, go back to the old regime the year after, and so on, indefinitely, for as long as you have no business or professional income. Nothing you choose this year restricts what you can choose next year. If your employer withheld tax under one regime through the year but you find the other regime works out cheaper at filing time, you can still select the more favourable regime on your ITR itself — your final tax liability is not locked in by what your employer assumed for TDS purposes.

The moment you have business or professional income — as a freelancer, consultant, proprietor, or partner with income from a firm — the simple employer-declaration route is no longer available to you, because there is no employer running TDS on your behalf in the same way. To opt for the old regime, you must formally file Form 10-IEA, a declaration submitted to the Income Tax Department stating that you are choosing to be taxed under the old regime for that specific tax year.

This is not merely a formality. Filing Form 10-IEA is what makes the old regime legally applicable to your return for that year. If you have business or professional income and you do not file it, you remain under the new regime by default, regardless of what deductions you might otherwise have been eligible to claim under the old regime.

This is the part of Form 10-IEA that catches people out, and it deserves to be stated as plainly as possible: once you have business or professional income and you opt out of the new regime using Form 10-IEA, you get exactly one opportunity in your lifetime to switch back to the new regime later. Use that one switch, and if you subsequently want to opt out of the new regime again while you still have business or professional income, you cannot — you are then required to remain in the old regime for as long as that business or professional income continues.

Put another way: for a salaried employee, choosing the old regime this year costs nothing in terms of future flexibility. For someone with business or professional income, choosing the old regime this year spends the only switch-back option they will ever get, the moment they later decide to return to the new regime. That decision to switch back is not free to reverse a second time — get it wrong twice and you are stuck in the old regime indefinitely, even in a future year where the new regime would clearly save you more tax.

This matters most for freelancers and small business owners in the early, lower-income years of their career, when the old regime's deductions (especially if they have a home loan or significant 80C/80D investments) can look more attractive than they will later, once income grows into brackets where the new regime's wider slabs start to win by a larger margin — a pattern the site's worked examples on old versus new regime tax outcomes show clearly at higher income levels. Opting into the old regime in a low-income year, switching back to the new regime once, and then wanting to opt out again in a later high-deduction year is exactly the sequence Form 10-IEA does not allow.

The two categories of taxpayer face genuinely different rules, summarised below.

Form 10-IEA must be filed on or before the due date for filing your original income tax return (under Section 139(1)) for that specific tax year, in order for the old regime to validly apply to that year. If you miss this deadline, you cannot retroactively claim the old regime for that year through a late or revised return — you remain under the default new regime for that year regardless of what you intended.

Because the choice for each year has to be filed fresh (it is not a one-time declaration that carries forward automatically), taxpayers with business or professional income need to actively re-file Form 10-IEA every year they want to stay in the old regime, and actively decide, before that same deadline, whether this is the year they want to use their one lifetime switch back to the new regime instead.

The mistake pattern is predictable: a freelancer or small business owner has a slow year, sees that maximising every old-regime deduction — 80C, 80D, home loan interest, HRA if applicable — saves more tax than the new regime would that year, files Form 10-IEA, and opts out. A few years later, business improves, income rises into brackets where the new regime's lower rates start winning by a wide margin even without any deductions, so they switch back — using up their one lifetime opportunity. Then a bad year, or a year with unusually high genuine deductions, comes along again, and they discover they can no longer opt out of the new regime at all, even though the old regime would clearly have saved them more tax that particular year.

The way to avoid this is straightforward but requires discipline: treat the switch back to the new regime as a decision you make only once you are reasonably confident it reflects your longer-term income trajectory, not just one good year. If you have business or professional income and are unsure, running the numbers under both regimes for your actual figures using the Income Tax Calculator before filing Form 10-IEA (or before switching back) is worth the ten minutes it takes — this is exactly the kind of decision where a wrong year-one call has a permanent, multi-year cost that a salaried taxpayer never has to worry about.