Form 10-IEA: how a business owner opts out of the default new tax regime before the Section 139(1) due date

If you run a business or a professional practice, the new tax regime under Section 115BAC applies to you by default from FY 2023-24 onwards. Staying in the old regime is not a box you tick in the return. It is a separate statutory form, Form 10-IEA, and it has a hard deadline: the due date under Section 139(1). For FY 2025-26 (AY 2026-27), taxpayers whose accounts must be audited are working towards a 31 October 2026 statutory due date, which makes this the last fortnight in which many proprietors and partners in professional firms can still make the choice for the year.

This explainer sets out who must file Form 10-IEA, who must not, what happens if you miss the date, and how the one-time re-entry rule works. All rules below are drawn from the Form 10-IEA FAQ on the Income Tax e-Filing portal and the text of the Income-tax Act, 1961 on India Code.

What the Section Says

Section 115BAC makes the new regime the default for individuals, HUFs, AOPs (other than co-operative societies), BOIs and artificial juridical persons (AJPs) from FY 2023-24. For FY 2025-26 the new-regime slabs run at 0%, 5%, 10%, 15%, 20%, 25% and 30%, with break points at Rs 4 lakh, Rs 8 lakh, Rs 12 lakh, Rs 16 lakh, Rs 20 lakh and Rs 24 lakh. Anyone who wants the old regime instead has to opt out, and the method of opting out depends on one question: do you have income from business or profession?

The table below summarises the two routes, as described in the Form 10-IEA FAQ.

In plain English, the rules for a business or professional taxpayer are these five points:

1. Form 10-IEA is mandatory to leave the default. Without it, your return is computed under Section 115BAC even if you fill in old-regime deductions.
2. Timing is fixed by Section 139(1). The form must be filed on or before the due date under Section 139(1). A form filed after that date is invalid, and the FAQ is explicit on this point.
3. Online only. There is no paper version; the form is submitted on the e-Filing portal.
4. No revision or withdrawal in the same year. Once filed for a year, the form cannot be revised or withdrawn for that year.
5. One-way re-entry. A taxpayer who has opted out can later file Form 10-IEA again with the option to re-enter the new regime. After that, they cannot go back to the old regime unless their business or profession income ceases.

Taxpayers without business income do not file Form 10-IEA at all. A salaried person with rental income, for example, simply selects the regime when filing the ITR for each assessment year, and can change it from one year to the next.

Which Section 139(1) due date applies

The due date that controls Form 10-IEA is the one written into Section 139(1), read with its Explanation 2. The table sets out the two statutory dates most business taxpayers face for FY 2025-26. CBDT can extend these by notification, so check the e-Filing portal before relying on any date.

The practical consequence is stark: for a non-audit business taxpayer who did not file Form 10-IEA by 31 July 2026, FY 2025-26 is already locked into the new regime. A belated return under Section 139(4) filed in, say, December 2026 does not reopen the choice, because the form ties to the 139(1) date, not to the return.

Worked Example

Take Meera, a sole proprietor running an interior-design studio, whose audited net business income for FY 2025-26 is Rs 18,00,000. She has no salary, so neither the Rs 75,000 new-regime standard deduction nor the Rs 50,000 old-regime standard deduction applies to her; both are available only against salary or pension income. She has Rs 3,50,000 of old-regime deductions (life-insurance premiums, PPF and home-loan interest on her self-occupied flat).

The comparison below uses the FY 2025-26 slab rates from Section 115BAC and the old-regime slabs (0% up to Rs 2.5 lakh, 5% to Rs 5 lakh, 20% to Rs 10 lakh, 30% above), with 4% health and education cess. Her income is below Rs 50 lakh, so no surcharge applies.

The new-regime figure builds up as Rs 20,000 (5% of Rs 4 lakh) plus Rs 40,000 (10% of Rs 4 lakh) plus Rs 60,000 (15% of Rs 4 lakh) plus Rs 40,000 (20% of the last Rs 2 lakh), which totals Rs 1,60,000. The old-regime figure is Rs 12,500 plus Rs 1,00,000 plus Rs 1,35,000 (30% of Rs 4.5 lakh), which totals Rs 2,47,500. Filing Form 10-IEA would cost Meera Rs 91,000 extra for FY 2025-26.

How large must deductions be before the old regime wins?

At Rs 18,00,000 of income, the old regime matches the new regime's Rs 1,60,000 slab tax only when taxable income falls to about Rs 11,58,333. That means Meera would need roughly Rs 6,41,667 of deductions before Form 10-IEA starts to pay. The break-even point moves with income, so run your own figures in the old vs new regime calculator before 31 October 2026 rather than after it.

If Meera's income were Rs 12,00,000 instead, the new-regime result would be nil under the Section 87A rebate (up to Rs 60,000 for income up to Rs 12 lakh in FY 2025-26), while the old-regime rebate is capped at Rs 12,500 and only for income up to Rs 5 lakh. For many small business owners, that rebate alone settles the question. You can model each side separately in the new-regime income tax calculator and the old-regime calculator.

The re-entry trap in numbers

Suppose a consultant files Form 10-IEA for FY 2023-24 to stay in the old regime, then files it again for FY 2025-26 to re-enter the new regime because their deductions shrank after repaying a home loan. From FY 2026-27 onwards, under the rule in the FAQ, they cannot return to the old regime while professional income continues, even if they take a fresh loan in 2027. That single re-entry is worth more than one year's saving, so treat it as a long-term decision.

Common Mistakes

Each of the seven pitfalls below follows directly from the Form 10-IEA FAQ and Section 115BAC, and each can surface when a return is processed under Section 143(1).

1. Claiming old-regime deductions without filing Form 10-IEA. If a proprietor fills Chapter VI-A deductions in ITR-3 or ITR-4 but no valid Form 10-IEA exists for the year, the Centralised Processing Centre computes tax under Section 115BAC. The deductions fall away and a demand follows, with interest under Sections 234B and 234C where advance tax falls short.

2. Filing the form after the Section 139(1) date. The FAQ states that a form filed after the due date is not valid. A non-audit taxpayer who files on 15 September 2026 has filed an invalid form for FY 2025-26, even if the return itself is filed the same day.

3. Treating the form like a salaried person's annual choice. A salaried employee can flip regimes every year inside the ITR. A business owner gets one exit and one re-entry. Taxpayers who switch back to the new regime for a single year with low deductions often discover the lock-in only in the following year.

4. Filing Form 10-IEA when you have no business income. A taxpayer with only salary, rent and capital gains does not need the form. Filing it is unnecessary, and the regime is selected in the return.

5. Assuming presumptive taxation exempts you. A taxpayer declaring income under Section 44AD or 44ADA still has business or profession income, so Form 10-IEA is the only route to the old regime. See our explainer on presumptive taxation and the presumptive tax calculator.

6. Counting on a revision. The form cannot be revised or withdrawn for the same year. If you file it on 20 October 2026 and then realise the new regime is cheaper, the old regime applies for FY 2025-26.

7. Losing the acknowledgement. The return for a year in which you rely on Form 10-IEA references that filing, so download and keep the acknowledgement from the e-Filing portal on the day you submit, well before 31 October 2026.

A short filing checklist

1. Run the old-vs-new comparison for FY 2025-26 first, because the form cannot be revised once filed.
2. Log in to the e-Filing portal and file Form 10-IEA online for AY 2026-27, choosing either to opt out of the new regime or to re-enter it.
3. Save the acknowledgement before the Section 139(1) due date, then file the return.

FAQ

Who has to file Form 10-IEA?

Individuals, HUFs, AOPs (other than co-operative societies), BOIs and AJPs who have income from business or profession and want the old regime instead of the default new regime under Section 115BAC. It must be filed on or before the Section 139(1) due date for the year.

I am salaried with some freelance income. Do I need Form 10-IEA?

Yes. Freelance fees are income from profession, so once you have any business or profession income, the Form 10-IEA route applies. Only taxpayers with no business or profession income choose the regime directly in the ITR.

What happens if I file Form 10-IEA late?

According to the Form 10-IEA FAQ on the e-Filing portal, a form filed after the Section 139(1) due date is invalid. Your income for that year is taxed under the new regime, whatever deductions the return claims.

Can I revise or withdraw Form 10-IEA after filing it?

No. Once filed for a year, the form cannot be revised or withdrawn for that year, so run the old-vs-new comparison before you submit.

Can I switch back to the new regime later?

Yes, once. You file Form 10-IEA again with the option to re-enter the new regime. After that you cannot opt back into the old regime unless your business or profession income ceases.

Is there a paper version of Form 10-IEA?

No. Form 10-IEA can be submitted only online through the Income Tax e-Filing portal, and the acknowledgement number is quoted in your return.

This article explains the provisions of the Income-tax Act, 1961 as they apply to FY 2025-26. The Income-tax Act, 2025 replaces it from 1 April 2026, so confirm the corresponding provisions and form for later years on incometax.gov.in. This is general information, not tax advice.