Default Regime is New Regime for ITR Filing

The default regime is the new regime for ITR filing.

Default Regime for ITR Filing: The new tax regime is the default for all taxpayers (as per the Finance Act, 2023). Form 10IEA Filing Requirements (AY 2024–25 onwards)

ITR Form	Requirement to file Form 10IEA	Switching Between Regimes	Notes
ITR-1	Not required	Allowed every year	No restrictions
ITR-2	Not required	Allowed every year	No restrictions
ITR-3	Mandatory if opting for Old Regime	One-time switch allowed	Must file Form 10IEA: <ul><li>Once to opt Old Regime</li><li>Once again to revert to New Regime</li></ul> After that, you’re locked into the New Regime permanently.
ITR-4	Mandatory if opting for Old Regime	One-time switch allowed	Same rules as ITR-3. Carefully decide before filing.

ITR 3 – Form 10IEA Filing is mandatory when opting for old regime and if opting again for New Regime in subsequent Year. if opted old regime for one year and then opted for new regime in subsequent year then not eligible to opt old regime again means one time switching option is there. Need to file Form 10IEA a maximum of 2 times only, first when you opt for old regime and Second when you opt for new regime in a subsequent year and leave old regime . If Form 10IEA already filed for old regime for a particular year, then the new regime can’t be opted for in such year and vice versa.

ITR 4 – Form 10IEA Filing mandatory when opting for old regime and if opting again for New Regime in subsequent Year, if opted old regime for one year and then opted for new regime in subsequent year then not eligible to opt old regime again means one time Switching options are there. You need to file Form 10IEA a maximum of 2 times only, First when you opt for old regime and Second when you opt for new regime in subsequent year and leaving old regime. If Form 10IEA already filed for old regime for a particular year then cant opt new regime in such year and vice versa.

Once Form 10IEA is filed for a particular assessment year, you cannot revise or change the regime for that year. Taxpayers filing ITR-3 or ITR-4 must think twice before filing Form 10IEA, as switching is allowed only once under Section 115BAC(6).

Comparison of Income Tax Slabs under Old Tax Regime, New Tax Regime for FY 2024–25

Key insights include a comparison of income tax slabs under the old tax regime, the new tax regime for FY 2024–25 (AY 2025–26), and the revised new tax regime for FY 2025–26, along with surcharge rates across all regimes.

Old Tax Regime (Individual below 60 years)

Income Slab (INR )	Tax Rate	Tax Amount
Up to INR 2,50,000	NIL	INR 0
INR 2,50,001 – INR 5,00,000	5%	INR 12,500
INR 5,00,001 – INR 10,00,000	20%	INR 1,00,000
Above INR 10,00,000	30%	–

Rebate under Section 87A if total income ≤ INR 5,00,000 & Deductions allowed under 80C, 80D, HRA, LTA, etc.

New Tax Regime – FY 2024–25 (AY 2025–26)

Income Slab (INR )	Tax Rate	Tax Amount
Up to INR 3,00,000	NIL	INR 0
INR 3,00,001 – INR 7,00,000	5%	INR 20,000
INR 7,00,001 – INR 10,00,000	10%	INR 30,000
INR 10,00,001 – INR 12,00,000	15%	INR 30,000
INR 12,00,001 – INR 15,00,000	20%	INR 60,000
Above INR 15,00,000	30%	–

Rebate under Section 87A if total income ≤ INR 7,00,000 & Most deductions not allowed (except standard deduction and NPS)

New Tax Regime – FY 2025–26 (Further Revised Slabs)

Income Slab (INR )	Tax Rate	Tax Amount
Up to INR 4,00,000	NIL	INR 0
INR 4,00,001 – INR 8,00,000	5%	INR 20,000
INR 8,00,001 – INR 12,00,000	10%	INR 40,000
INR 12,00,001 – INR 16,00,000	15%	INR 60,000
INR 16,00,001 – INR 20,00,000	20%	INR 80,000
INR 20,00,001 – INR 24,00,000	25%	INR 1,00,000
Above INR 24,00,000	30%	–

Rebate under Section 87A if total income ≤ INR 12,00,000 (as per latest update)

Surcharge Rates (All Regimes)

Total Income (INR )	Surcharge Rate
INR 50,00,001 – INR 1 crore	10%
INR 1 crore – INR 2 crore	15%
INR 2 crore – INR 5 crore	25% (Old Regime only)
Above INR 5 crore	37% (Old Regime only)

• Under the new regime, maximum surcharge is capped at 25% & Health & Education Cess: 4% on total tax + surcharge
• New Regime (FY 2025–26) offers: More granular tax slabs, a higher Section 87A rebate limit (INR 12 lakh), and still no major deductions allowed, but better net tax for many
• The old regime is still useful for those with Large deductions under 80C/80D/HRA, etc., and lower net taxable income post deductions
• High-income individuals benefit under the new regime due to the surcharge cap at 25% (vs 37% in the old regime for income above INR 5 crore).

General Comparison – FY 2025–26 vs. FY 2024–25

Feature	FY 2025–26	FY 2024–25
Rebate Eligibility (Sec 87A)	INR 12,00,000	INR 7,00,000
Standard Deduction	INR 75,000 (salaried) INR 25,000 (pensioners)	INR 75,000 (salaried)
Effective Tax-Free Salary	INR 12,75,000	INR 7,75,000
Rebate Amount (u/s 87A)	INR 60,000	INR 25,000

Allowances/Deductions Available in New Regime

Exemption / Deduction	FY 2025–26	FY 2024–25
HRA Exemption	❌	❌
Leave Travel Allowance (LTA)	❌	❌
Food Allowance	❌	❌
30% Additional Employee Cost (80JJAA)	❌	❌
Entertainment & Prof. Tax	❌	❌
Perquisites for Official Purposes	❌	✅
Home Loan Interest (Self-occupied)	❌	❌
Home Loan Interest (Let-out)	✅	✅
Section 80C (LIC, PPF, etc.)	❌	❌
Employee’s NPS Contribution	❌	❌
Employer’s NPS Contribution	✅ (14% for all employees)	✅ (14% for all employees)
Medical Insurance – 80D	❌	❌
Disabled Individual – 80U	❌	❌
Education Loan – 80E	❌	❌
EV Loan – 80EEB	❌	❌
Donation – 80G	❌	❌
Savings Interest – 80TTA/TTB	❌	❌
Other Chapter VI-A deductions	❌	❌
Family Pension Deduction	❌	❌
Gifts up to INR 5,000	✅	✅
VRS Exemption – 10(10C)	✅	✅
Gratuity Exemption – 10(10)	✅	✅
Leave Encashment – 10(10AA)	✅	✅
Daily Allowance	✅	✅
Transport for specially-abled	✅	✅
Conveyance Allowance	✅	✅

• Highlights for FY 2025–26: Significant rebate hike under Section 87A (INR 12 lakh threshold) & Most Chapter VI-A deductions remain disallowed.
• Greater scope for non-taxable reimbursements (like conveyance and daily allowance) & Still no relief for HRA, LTA, 80C, or 80D in the New Regime
• Leave Encashment rules after retirement or resignation as per Section 10(10AA) : In case Central/State Government Employees : Leave Encashment received at retirement/resignation Then Fully Exempt from Income Tax. Then No limit on the exemption.In case Non-Government / Private Sector Employees : Leave encashment received at retirement or resignation is partly exempt. Exemption is available under Section 10(10AA)(ii). New Limit (Budget 2023) Earlier: INR 3,00,000 (fixed since 2002) & Now: INR 25,00,000 (effective AY 2023-24 onwards).
• Any excess over the exemption is taxable as salary income.  Exemption Calculation (Least of the following is exempt):
  • Cash equivalent of leave standing to the credit of the employee (earned leave balance × average salary of last 10 months).
  • 10 months’ average salary (based on last 10 months’ basic salary + DA + commission if fixed % of turnover).
  • Amount actually received as leave encashment.
  • Statutory limit – INR 25,00,000 (after Budget 2023).

  In Case of Death of Employee : If an employee dies before availing leave encashment. Payment to legal heirs is fully exempt from tax, regardless of employer (Govt. or private). In Summary

  • Govt employees Then Full exemption.
  • Private employees then Exemption up to INR 25 lakh (least of 4 conditions).
  • On death then Fully exempt for legal heirs.