In a significant shift for taxpayers, the process of filing income tax returns has undergone major changes with the start of the financial year 2025-26. The government has now made the new tax regime the default option when filing Income Tax Returns (ITR). This means that taxpayers will automatically see the new tax regime applied unless they actively choose to opt for the old tax system.

Flexibility to Choose the Tax Regime 

While the new regime is the default, taxpayers still have the freedom to switch to the old tax slab if they find it more beneficial. However, they will need to manually select the old system while filing their returns.

According to Chartered Accountants Ashish Rohatgi and Rashmi Gupta, professionals with taxable income will have the flexibility to choose their preferred tax regime every financial year. This means an individual can file ITR under the old tax regime one year and then opt for the new regime the following year, depending on their financial situation.

Impact on TDS Deductions

Experts also clarified that if an employer has deducted TDS (Tax Deducted at Source) under the old tax system, employees can still file their ITR under the new tax regime. This provides additional flexibility for salaried individuals to adjust their tax liability as per their preference.

Key Takeaways for Taxpayers:

1. New tax regime is now the default option for filing ITR.
2. Option to switch to the old tax regime while filing returns.
3. Taxpayers can change their regime selection every year based on their financial benefits.
4. TDS deductions under one regime won’t restrict ITR filing under another.

This move aims to simplify tax compliance and encourage more taxpayers to opt for the new regime, which features lower tax rates but fewer deductions. However, individuals must carefully assess their financial situation to choose the regime that works best for them.

For taxpayers gearing up for ITR filing, it is advisable to consult with a financial expert to make an informed decision regarding the tax regime that provides maximum savings.