Form 10-IEA Explained: How Business and Professional Income Earners Opt Out of the New Tax Regime

The income tax return season for Assessment Year 2026-27 is open, and the single most expensive mistake a self-employed professional can make is assuming that choosing the old regime is a tick-box exercise. Since FY 2023-24, the new tax regime under section 115BAC(1A) of the Income-tax Act 1961 has been the default. For anyone with income from business or profession, stepping out of that default requires a separate statutory form, Form 10-IEA, filed before the due date under section 139(1). Miss it, and the old regime is simply locked away for that year.

This matters because the stakes are real. A consultant with large home loan interest and Chapter VI-A deductions can pay materially less tax under the old regime, but only if the paperwork is correct. This guide walks through what Form 10-IEA does, a fully worked Rs 24,00,000 income example for FY 2025-26, the errors that surface in ITR processing, and the questions readers ask most. Every figure below is drawn from the FY 2025-26 slab structure and the Income Tax Department's own Form 10-IEA FAQ.

What the Section Says

Section 115BAC(1A), inserted by the Finance Act 2023 and effective from AY 2024-25, makes the concessional-rate regime the default for an individual, Hindu Undivided Family (HUF), Association of Persons (AOP) other than a co-operative society, Body of Individuals (BOI), and an Artificial Juridical Person referred to in section 2(31)(vii). Under the default, the taxpayer foregoes most deductions in exchange for the wider slabs.

The right to opt out sits in section 115BAC(6). Here the law draws a sharp line between two kinds of taxpayer. A person with no business or professional income, typically a salaried individual or a pensioner, can choose the old regime year by year, simply by indicating that choice inside the ITR before the section 139(1) due date. A person who has income under the head profits and gains of business or profession does not get that flexibility. Per the Income Tax Department's Form 10-IEA FAQ, such a taxpayer must file Form 10-IEA to opt out of, or later re-enter, the new regime.

Four rules from the official FAQ govern the form, and each one is a potential trap:

The most consequential point is the deadline. The FAQ states plainly that if Form 10-IEA is not filed on or before the section 139(1) due date, the option to be taxed under the old regime is no longer available for that year. For a non-audit individual filing for AY 2026-27, that due date is 31 July 2026. There is no belated route to the old regime once that date passes; a return filed late under section 139(4) defaults to the new regime.

The second trap is the one-time switch. Section 115BAC(6) permits a business or professional taxpayer who has opted out to return to the new regime only once. After that single re-entry, the door to the old regime stays shut for every later year in which they continue to earn business or professional income. A salaried person faces no such limit and may flip each year. If you want to model the two regimes side by side before committing, the old versus new regime calculator on Oquilia lets you compare the final tax outflow in seconds.

Worked Example

Consider Meera, a practising architect, whose net professional income for FY 2025-26 is Rs 24,00,000. She has no salary income, so her only path to the old regime is Form 10-IEA. She wants to know whether opting out is worth it.

Under the old regime she can claim the following deductions, all of which the new regime disallows:

Note that the 80CCD(1B) deduction is not allowed in the new regime; 80CCD(1B) is available only in the old regime, and the section 24(b) self-occupied interest of Rs 2,00,000 is likewise switched off under section 115BAC(1A). Her old-regime taxable income is therefore Rs 24,00,000 minus Rs 8,00,000, which is Rs 16,00,000.

Applying the FY 2025-26 old-regime slabs of nil up to Rs 2,50,000, 5% to Rs 5,00,000, 20% to Rs 10,00,000 and 30% above:

Now the default new regime, where she keeps the full Rs 24,00,000 because none of those eight deductions apply. The FY 2025-26 new-regime slabs run nil to Rs 4,00,000, then 5%, 10%, 15%, 20%, 25% and 30% in Rs 4,00,000 bands:

Meera's old-regime liability of Rs 3,04,200 is Rs 7,800 lower than the new-regime figure of Rs 3,12,000. Filing Form 10-IEA before 31 July 2026 saves her that Rs 7,800. The margin is deliberately thin to make a wider point: after the Finance Act 2025 widened the new-regime slabs and lifted the section 87A rebate to Rs 60,000 (covering income up to Rs 12,00,000), the old regime now wins only when deductions are very large, roughly Rs 8,00,000 in this Rs 24,00,000 case. Always run your own numbers on the new regime calculator before deciding. Neither surcharge nor the section 87A rebate applies to Meera, since her income sits below the Rs 50,00,000 surcharge threshold and well above the Rs 12,00,000 rebate ceiling.

Common Mistakes

The pitfalls below are the ones that turn a valid old-regime claim into a new-regime assessment, often discovered only when the intimation under section 143(1) arrives.

Filing the ITR before the form. The correct sequence is Form 10-IEA first, then the return. The form generates an acknowledgement number that the ITR asks for. Taxpayers who file the return first frequently leave that field blank and are processed under the default new regime.

Confusing it with the old Form 10-IE. Form 10-IE applied up to AY 2023-24, when the old regime was the default and the new regime was the opt-in. From AY 2024-25 the logic reversed and Form 10-IEA replaced it. Using guidance written for Form 10-IE leads to the wrong action entirely.

Missing the 31 July 2026 deadline. Because the FAQ ties the option strictly to the section 139(1) due date, a return filed even one day late forfeits the old regime for AY 2026-27. There is no condonation specifically for a late regime choice, unlike the separate condonation route that exists for a missed ITR e-verification deadline.

Burning the one-time switch carelessly. A business owner who opts out, then re-enters the new regime to chase a one-year saving, may find they cannot return to the old regime in a later high-deduction year. Section 115BAC(6) gives only a single re-entry while business income continues.

Assuming salaried filers need the form. A pure salary earner does not file Form 10-IEA at all; they select the regime inside the ITR. Filing the form unnecessarily can create a mismatch. If your eligibility itself is unclear, our explainer on ITR-1 Sahaj eligibility for AY 2026-27 sets out which return form fits which taxpayer.

FAQ

Do salaried employees need to file Form 10-IEA to choose the old regime?

No. A salaried taxpayer with no business or professional income simply selects the old regime inside the ITR before the section 139(1) due date, which for non-audit cases is 31 July 2026. Form 10-IEA is required only where there is income under the head profits and gains of business or profession, as the Income Tax Department Form 10-IEA FAQ confirms.

What is the last date to file Form 10-IEA for AY 2026-27?

Form 10-IEA must be filed on or before the section 139(1) due date, which is 31 July 2026 for most individuals not subject to audit. File the form first, record its acknowledgement number, then file the ITR using that number.

Can I switch back to the new regime after opting out with Form 10-IEA?

Yes, but only once. Under section 115BAC(6), a taxpayer with business or professional income who has opted out may re-enter the new regime a single time by filing Form 10-IEA again. After that one re-entry they cannot opt out again for as long as the business or professional income continues.

I forgot to file Form 10-IEA before the due date. Can I still use the old regime?

No. The Income Tax Department FAQ is explicit that if Form 10-IEA is not filed by the section 139(1) due date, the old regime is unavailable for that year and the return is processed under the default new regime under section 115BAC(1A). A return filed late under section 139(4) cannot revive the choice.

Since which assessment year is Form 10-IEA applicable?

Form 10-IEA applies from AY 2024-25, the first year the new regime under section 115BAC(1A) became the default. It is submitted online only through the e-filing portal.

Which deductions am I giving up by staying in the new regime?

The new regime disallows most Chapter VI-A deductions, including 80C up to Rs 1,50,000 and 80D. In particular, 80CCD(1B) is not allowed in the new regime; the Rs 50,000 NPS deduction and the section 24(b) self-occupied home loan interest of up to Rs 2,00,000 are both forfeited. It does retain the Rs 75,000 standard deduction on salary and the employer NPS deduction under section 80CCD(2). Use the income tax calculator to see the rupee impact for your own deduction profile.

Does opting out with Form 10-IEA affect my advance tax or TDS?

Your regime choice changes your total liability, so it changes how much advance tax you should have paid across the four instalments due 15 June, 15 September, 15 December and 15 March. Salary TDS is deducted under whichever regime you declared to your employer; if it differs from your final choice, the gap is squared up in the return. The TDS calculator helps you estimate the deduction before you file.