Many salaried individuals are confused about whether they can change their tax regime at the time of filing their Income Tax Return (ITR), especially if their employer has already deducted TDS (Tax Deducted at Source) under a different regime.
Let’s break down the answer.
Can You Switch Tax Regime While Filing ITR?
Yes, salaried employees can switch their tax regime while filing their ITR, even if their employer deducted TDS under the old regime.
Here’s why:
The tax regime you choose with your employer is only for TDS calculation purposes.
Your final choice of tax regime is made at the time of filing your ITR.
So, if you originally opted for the old regime during the financial year but later find that the new regime saves you more money, you can switch when filing your return.
What’s the Difference Between the Old and New Regimes?
The new tax regime has lower tax rates, but you must give up exemptions and deductions like:
HRA (House Rent Allowance)
LTA (Leave Travel Allowance)
80C (investments like ELSS, PPF, LIC, etc.)
80D (health insurance premiums)
80CCD, 80TTA, and others
The old regime allows you to claim these deductions, but tax rates are higher.
Important Points to Remember
If you want to opt for the old regime, you must file your ITR before the due date.
The new regime is the default option starting FY 2023–24 (AY 2024–25). If you miss the due date for filing ITR, you can still choose the new regime.
If you file under the old regime, make sure to claim all eligible deductions to reduce your tax liability.
Final Advice
Even though your employer deducted TDS based on one regime, you have the full right to choose whichever regime suits you best at the time of filing your ITR.
Review your income, deductions, and tax liability under both regimes and make the smarter choice.
