Form 10-IEA E-Filing Guide: Opting In and Out of Old Tax Regime for Business Entities

When the Central Board of Direct Taxes (CBDT) made the New Tax Regime under Section 115BAC the default tax regime, it introduced a fundamental procedural distinction between salaried taxpayers and individuals carrying on business or profession.

While salaried taxpayers can switch between regimes freely inside their ITR form each year, anyone filing ITR-3 (Business/Profession) or ITR-4 (Sugam Presumptive) must electronically submit Form 10-IEA to exercise or withdraw their regime choice.

1. Why Form 10-IEA is Crucial for Business Owners & Professionals

Under Section 115BAC(6), if you derive income from:

• A sole proprietorship business or trading firm,
• A partner's share/remuneration from a partnership firm,
• Professional practices (Doctors, Engineers, Advocates, Consultants, Chartered Accountants),
• Speculative, intraday, or F&O derivative trading,

You cannot opt for the Old Tax Regime directly in the ITR utility. You must first furnish Form 10-IEA on the Income Tax e-Filing portal before validating your return.

Critical Deadline: Form 10-IEA must be filed on or before the due date specified under Section 139(1) (typically 31st July for non-audit cases, or 31st October for tax audit cases). If you file a belated return under Section 139(4), the option to claim the Old Tax Regime is permanently lost for that financial year.

2. The 'Once in a Lifetime' Switch Rule

The statutory mechanism under sub-section (6) of Section 115BAC operates with strict switching restrictions:

What Happens Once You Re-Enter the New Regime?

If a business taxpayer opts out of the default New Regime (to claim Old Regime deductions like 80C, 80D, 80-IAC, or unabsorbed depreciation), and later withdraws that option to return to the New Regime, they are permanently barred from opting into the Old Tax Regime again in any future financial year, unless their business income ceases to exist.

3. Step-by-Step E-Filing Process for Form 10-IEA

1. Portal Login: Log into incometax.gov.in using the taxpayer's PAN and password.
2. Navigate to Statutory Forms: Go to e-File > Income Tax Forms > File Income Tax Forms.
3. Select Form 10-IEA: Choose Application for exercise/withdrawal of option under Section 115BAC(6).
4. Choose Assessment Year: Select AY 2026-27 (for FY 2025-26).
5. Declare Option:
   • Select Opting Out of New Tax Regime (if choosing Old Regime with Chapter VI-A deductions).
   • Select Re-entering New Tax Regime (if withdrawing previous Old Regime option).
6. Enter Business Particulars: Provide Nature of Business/Profession code and whether any unit is located in an IFSC.
7. Verification: Verify using Aadhaar OTP, Electronic Verification Code (EVC), or Digital Signature Certificate (DSC).

4. Common Compliance Traps & Practical CA Advice

• Missing Acknowledgment Number: The 15-digit Form 10-IEA acknowledgment number and filing date must be entered into Schedule "Part A - General" of your ITR form. Without this, the CPC processing software will automatically recalculate your tax liability under the default New Regime and issue a demand notice with interest under Section 234A/234B.
• Deductions Disallowance: If you file Form 10-IEA after the July 31 / October 31 deadline, CPC will disallow all Section 80C, 80D, and 80-G claims automatically.

For specialized tax regime advisory and timely ITR-3/ITR-4 filing in Raipur and Kalahandi, consult our Income Tax Practice.