In case of “non-business cases”, option to choose the regime can be exercised every year directly in the ITR to be filed on or before the due date specified under section 139(1) i.e. 16th September 2025 for FY 2024-25. In case of taxpayers having “income from business and profession” and who want to opt out of new tax regime, the assessee would be required to furnish Form 10-IEA on or before the due date u/s 139(1) for furnishing the return of income. Also, for the purpose of withdrawal of such option i.e. opting out of old tax regime shall also be done by way of furnishing Form No.10-IEA. New tax regime is the default tax regime. However, taxpayers can opt for the old regime.
Thus, taxpayers who miss the due date for filing their income tax return cannot subsequently opt for the old regime while filing a belated return under section 139(4). The option to exercise or switch to the old tax regime is available only when the return is filed within the prescribed due date u/s 139(1). Once the deadline has lapsed, the belated return can be filed only under the new concessional regime which is also the default regime. Consequently, failure to meet the original filing timeline not only attracts late filing fees and loss of certain carry-forward benefits but also restricts the taxpayer to the new regime, regardless of their intention to opt for the old tax regime.
Restriction of late filers to the new tax regime:
The restriction of belated returns to the new tax regime may be primarily driven by the Income Tax Department’s objective of simplifying administration and reducing misuse of extended timelines. The new regime, being the default framework, is designed with fewer deductions, exemptions, and compliance requirements. By mandating that the old regime can be chosen only when the return is filed within the original due date, the Department may intend to ensure greater certainty, timely compliance, and minimisation of last-minute adjustments. This approach also aligns with the policy direction of encouraging migration to the new concessional regime while still preserving flexibility for those who make a timely and considered choice.
Penalties for filing late under the new regime:
The consequences of furnishing the return beyond the due date u/s 139(1) are same under both the old and new tax regime as follows:
- Late Filing Fee (Section 234F): If the return is not filed within the prescribed due date (i.e. 16th September 2025 for AY 2025-26), a late fee of up to Rs. 5,000 may be levied. For taxpayers with total income below Rs. 5 lakh, the maximum fee is Rs. 1,000.
- Interest under Sections 234A: Taxpayers would be liable to pay simple interest u/s 234A of the IT Act at the rate of 1% for every month or part of a month, commencing from the date immediately following the due date to the actual date of furnishing of the return; or in case no return has been furnished, ending on the date of completion of the Best judgement assessment by the revenue authorities u/s 144 of the IT Act.
- Loss of Benefits: Taxpayer may lose out on certain deductions and/or set off and carry forward of losses (other than house property loss) as a result of filing the return beyond the due date prescribed u/s 139(1) of the IT Act.
- Penalty for Concealment or Misreporting (Section 270A): In case the taxpayer has taxable income and the taxpayer fails to file his return of income, then there are enabling provisions to levy penalty u/s 270A for equivalent to 50% of the tax which may have been avoided by the taxpayer by way of such non furnishing of income tax return.
- Prosecution (Section 276CC): Further, the Income Tax authority has a power to initiate prosecution u/s 276CC of the IT Act in case of such defaulting taxpayer who would be subjected to a rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 2 years and alongwith fine. Also, in case if the tax likely to have been evaded exceeds Rs. 25,00,000 had such failure of non furnishing of return not been discovered, the term of imprisonment may range from 6 month to 7 years alongwith a fine. However, no such prosecution can be initiated where the tax sought to be evaded is upto Rs. 10,000/- or an updated return is filed u/s 139(8A) of the IT Act.
Revision of returns:
The ability to revise a return does not, by itself, allow all taxpayers to change their choice of tax regime. The position depends upon whether the taxpayer has business or professional income.
For individuals who do not have business or professional income, the option to choose between the old and new tax regime under section 115BAC(6) can be exercised afresh each year at the time of filing the return. If such a taxpayer later files a revised return within the prescribed time limit under section 139(5), they are also permitted to change their regime choice in that revised return. This is because the option is linked to the return of that year and is not locked in for future years.
Exemptions or special cases:
Once the due date of filing the return under section 139(1) has passed, the law significantly limits the flexibility available to taxpayers in choosing their tax regime. For individuals not having business or professional income, the choice between the old and new regime under section 115BAC(6) is available only at the time of filing a return within the due date. If such taxpayers miss the deadline and are required to file a belated return under section 139(4), they are mandatorily shifted to the new regime, as the option to continue under the old regime cannot be exercised belatedly.
For individuals or Hindu undivided families having business or professional income, the option is exercised through Form 10-IEA, which must be filed on or before the due date under section 139(1). If this form is not furnished within the prescribed time, the taxpayer loses the ability to opt for the old regime for that year.
Thus, the law does not provide for exemptions or special cases to revert to the old regime once the deadline is missed. The only limited relaxation lies in the ability of taxpayers without business income to revise their return and switch regimes, but this is available only if the original return was filed within time.
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