The procedure depends on two factors:

1. Whether the income relates to FY 2025-26 or FY 2026-27; and
2. Whether the taxpayer has income from business or profession.

Quick Decision Guide

Part A: Opting Out for AY 2026-27

AY 2026-27 relates to income earned during FY 2025-26. Therefore, the return, regime selection and Form 10-IEA continue to be governed by the Income-tax Act, 1961.

Step 1: Check Whether You Have Business or Professional Income

Form 10-IEA is required only when the taxpayer has income taxable under the head:

It may apply to eligible:

• Individuals;
• Hindu Undivided Families;
• Associations of persons, other than cooperative societies;
• Bodies of individuals; and
• Artificial juridical persons.

Step 2: Compare the Tax Under Both Regimes

Before opting out, calculate the tax liability under both regimes.

The old regime may be beneficial where the taxpayer has substantial eligible exemptions or deductions, such as:

• House Rent Allowance exemption;
• Home-loan interest;
• Section 80C investments;
• Medical-insurance deduction;
• Donations eligible under Section 80G; or
• Other deductions unavailable under the new regime.

How to File Form 10-IEA on the Income-tax Portal

Form 10-IEA was notified under Rule 21AGA for exercising the option under Section 115BAC(6). For AY 2026-27, it must be submitted on or before the applicable due date under Section 139(1).

Step 1: Log In to the E-Filing Portal

Visit the Income-tax e-Filing portal and log in using the taxpayer’s PAN and password.

Step 2: Open the Income-tax Forms Section

From the dashboard, select:

Step 3: Select Form 10-IEA

Go to the category for persons having business or professional income.

Select Form 10-IEA, or search for the form using the portal search box.

Step 4: Select AY 2026-27

Choose Assessment Year 2026-27 and click Continue.

 

Step 5: Confirm Business or Professional Income

Select Yes when asked whether the taxpayer has income under the head “Profits and gains of business or profession”.

Select the applicable return-filing due date based on the taxpayer’s category.

Step 6: Confirm the Regime Selection

Confirm that the taxpayer wants to opt out of the default new tax regime and be taxed under the old regime.

Step 7: Review Basic Information

The portal generally pre-fills details such as:

• Name;
• PAN;
• Assessment year; and
• Taxpayer status.

Step 8: Complete Additional Information

Provide details relating to an International Financial Services Centre unit, where applicable.

Step 9: Complete the Declaration and Verification

Review the declaration and confirm that the information furnished is correct.

The form contains three principal sections:

1. Basic information;
2. Additional information; and
3. Declaration and verification.

Step 10: Preview and E-Verify the Form

Preview the completed Form 10-IEA and proceed to e-verification.

Depending on the taxpayer’s permitted verification methods, the form may be verified through:

• Aadhaar OTP;
• Electronic Verification Code; or
• Digital Signature Certificate.

Step 11: Save the Acknowledgement

After successful submission, download the filed form and save:

• Transaction ID;
• Acknowledgement number;
• Assessment year; and
• Filing date.

Deadline for Filing Form 10-IEA

The exact Section 139(1) due date depends on matters such as:

• Whether accounts are required to be audited;
• Whether transfer-pricing provisions apply;
• The taxpayer’s legal status; and
• Any extension officially notified by the Income Tax Department.

Effect of Filing Form 10-IEA

For a taxpayer having business or professional income, the old-regime option does not operate as a fresh annual choice.

Once the taxpayer validly opts out through Form 10-IEA:

• The old-regime option ordinarily continues for subsequent years;
• A later Form 10-IEA may be filed to re-enter the new regime;
• Re-entry is generally permitted only once; and
• After re-entering, the taxpayer cannot ordinarily opt out again while business or professional income continues.

Employer Declaration Is Not Form 10-IEA

Employees are normally asked to declare their preferred tax regime to their employer so that the employer can calculate salary TDS.

For AY 2026-27:

• If an employee did not declare a regime, the employer would generally calculate TDS under the default new regime.
• A salaried taxpayer without business income can still select the old regime in the ITR filed within the applicable due date.
• A taxpayer having business or professional income must separately file Form 10-IEA within the due date.
• The regime selected in the return may differ from the regime used by the employer, which may result in additional tax payable or a refund.

Part B: Tax Year 2026-27 Under the Income-tax Act, 2025

Tax Year 2026-27 covers income earned from 1 April 2026 to 31 March 2027.

The Income-tax Act, 2025 applies to this period, and Section 202 replaces Section 115BAC as the provision governing the new tax regime.

Is Form 10-IEA Required for Tax Year 2026-27?

Rule 136 of the Income-tax Rules, 2026 states that an option exercised or withdrawn under Section 202(4) must be made in the return of income furnished under Section 263(1) for the relevant tax year.

Therefore:

• A person without business or professional income will choose the regime in the Tax Year return.
• A person having business or professional income will also exercise or withdraw the Section 202 option through the Tax Year return.
• Form 10-IEA remains relevant for AY 2026-27 and earlier periods governed by the 1961 Act, but it is not the prescribed option form for Tax Year 2026-27.

What Happens to an Existing Form 10-IEA Option?

A valid option exercised under the Income-tax Act, 1961 immediately before the commencement of the new Act is protected by the transition provisions.

Employer Declaration for Tax Year 2026-27

From 1 April 2026, salary TDS is governed by Section 392(1) of the Income-tax Act, 2025.

Employers must calculate TDS for Tax Year 2026-27 after considering:

• Projected salary;
• Other income declared by the employee;
• Eligible deductions;
• Exemptions; and
• The employee’s intended tax regime.

Declarations for Tax Year 2026-27 should use the corresponding provisions of the 2025 Act. For example, references to Section 80C under the old Act are replaced by the relevant provisions of Section 123 read with Schedule XV under the new Act.

How to Complete the Process Through myITreturn

For AY 2026-27 Without Business or Professional Income

1. Sign in to myITreturn and select the relevant member profile.
2. Start filing for AY 2026-27.
3. Import pre-filled information and add salary, house-property, capital-gains and other-income details.
4. Review the tax computation under both regimes.
5. Select the old regime in the ITR where it is beneficial.
6. Review the final income and tax summary.
7. Submit the return through myITreturn as an ERI or download the JSON file for upload on the Income-tax portal.
8. Complete e-verification.

For AY 2026-27 With Business or Professional Income

1. Complete the income and deduction details in myITreturn.
2. Compare the old- and new-regime computations.
3. Where the old regime is selected, file Form 10-IEA separately on the Income-tax e-Filing portal before the applicable Section 139(1) due date.
4. Save the Form 10-IEA acknowledgement number.
5. Return to the myITreturn filing flow.
6. Select the old regime and provide the Form 10-IEA details wherever required in the ITR.
7. Review the tax summary and pay any self-assessment tax.
8. Submit the return directly through myITreturn or download the JSON for portal upload.
9. E-verify the return and retain the acknowledgement.

For Tax Year 2026-27

For the present:

1. Give the intended regime declaration to the employer, where applicable.
2. Maintain deduction and exemption documents.
3. Compute advance tax under the selected regime.
4. Exercise or report the final Section 202 option in the Tax Year return when the return is filed in 2027.

Common Mistakes to Avoid

Conclusion