Filing income tax may soon become simpler.
The Income Tax Department has proposed new draft rules that could remove an extra step many taxpayers currently face while choosing between the old and new tax regimes.
If approved, this change will allow taxpayers to select their preferred tax system directly in the Income Tax Return (ITR) form.
What Is the Problem Right Now?
At present, some taxpayers — especially:
Individuals with business income
Hindu Undivided Families (HUFs)
Professionals
must file a separate Form 10-IEA to opt for the old tax regime.
This form has to be submitted electronically before the ITR deadline.
However, salaried individuals without business income can choose the old regime directly in their tax return.
They do not need to file any extra form.
This difference has created confusion and additional compliance work for certain categories of taxpayers.
What Will Change Under Draft Rules 2026?
Under the proposed Draft Income Tax Rules, 2026:
Taxpayers will no longer need to file a separate declaration form.
The choice between the old and concessional (new) tax regime can be made directly in the income tax return.
The option can be exercised or withdrawn while filing the return under Section 263(1) of the new Income Tax Act, 2025.
In simple terms, everything will be done within the ITR itself.
This means fewer forms and fewer chances of missing a compliance step.
Who Will Be Covered?
The draft rules apply to a wide range of taxpayers, including:
Manufacturing domestic companies
Domestic companies
New manufacturing companies
Individuals and HUFs
Associations of Persons (AOPs)
Bodies of Individuals (BOIs)
Resident co-operative societies
New manufacturing co-operative societies
For each financial year, the choice must be made within the return filed for that year.
Why This Is Important
This proposal aims to:
Reduce duplication in compliance
Create uniform rules for all taxpayer categories
Make tax filing more streamlined
Currently, taxpayers with business income face more procedural requirements compared to salaried individuals.
If these draft rules are notified in their current form, the tax regime selection process will become simpler and more consistent.
The changes are expected to come into effect along with the new Income Tax Act, 2025.
For taxpayers, this could mean one less form — and a smoother filing experience.
