Form 10-IEA to opt out of the new regime

Form 10-IEA is the form, notified under Rule 21AGA of the Income-tax Rules 1962, by which a taxpayer with income from business or profession opts out of the default new tax regime into the old tax regime. For assessment year 2026-27 it must be filed on or before 31 August 2026 where the accounts are not required to be audited, and on or before 31 October 2026 where they are. It is filed electronically, before the income-tax return, and it generates an acknowledgement number entered in that return.

A salaried central government employee or a pensioner with no business income does not file it at all. Rule 21AGA(1)(b) puts that choice in the return itself, made afresh every year, with no form and no lifetime limit. The form and everything that follows from it, including the single permitted switch back, bind only the smaller group who also carry income under the head profits and gains from business or profession.

Two dates have moved since the form was introduced, and both matter more than the form’s mechanics. Section 5 of the Finance Act 2026 substituted Explanation 2 to Section 139(1) and gave a non-audit business or professional taxpayer a due date of 31 August rather than 31 July, so the deadline that governs Form 10-IEA is no longer the one most filing calendars print. And the Income-tax Rules 2026, notified by G.S.R. 198(E) on 20 March 2026, prescribe no successor to the form: from tax year 2026-27 the option under Section 202 of the Income-tax Act 2025 is exercised inside the return under Rule 136. Assessment year 2026-27 is the last year Form 10-IEA is filed.

This article covers what the form is and which provision it gives effect to, who files it and who need not, the due dates as they now stand, what missing them costs, the once-only withdrawal and the narrow circumstance in which eligibility revives, the contents of the notified form item by item, how it is filed and verified, the position on belated and revised returns, and what happens to an existing option on 1 April 2026. For the wider mechanics of choosing a regime, see how to switch tax regime; for the provision behind the form, see Section 115BAC.

What Form 10-IEA is

Form 10-IEA gives effect to Section 115BAC(6) of the Income-tax Act 1961, and it does two jobs. Under clause (i) of that sub-section it is the means by which a person with income from business or profession opts out of the default new regime into the old regime. Under the proviso to the same sub-section it is also the means by which that person later withdraws the option and returns to the new regime, the one time the statute allows. The notified heading of the form states both jobs: “Application for exercise of option under clause (i) of sub-section (6) of section 115BAC or withdrawal of option under the proviso to sub-section (6) of section 115BAC of the Income-tax Act, 1961.”

The form and the rule behind it were inserted by the Central Board of Direct Taxes through Notification No. 43/2023 dated 21 June 2023, published as G.S.R. 452(E) and titled the Income-tax (Tenth Amendment) Rules, 2023. The same notification amended Rules 2BB, 3 and 5 to carry the consequences of the amended Section 115BAC through the exemption, perquisite and depreciation rules. Rule 21AGA applies to any previous year relevant to an assessment year beginning on or after 1 April 2024.

The form exists because the two-regime system runs on a default plus an option. The Finance Act 2023 inserted Section 115BAC(1A), which makes the new regime the rate schedule that applies unless the person positively elects otherwise, so no step at all is needed to be taxed under it. Election of the old regime is the positive act, and where the person has business income the statute requires that act to be recorded in a dated filing that binds subsequent years rather than made casually in the return each year.

Who must file Form 10-IEA, and who need not

The test is a single question, and it is not about the amount of income or the return form: does the person have income under the head profits and gains from business or profession? Rule 21AGA(1) splits the two cases in terms.

A person with business or professional income exercises the option “in Form No. 10-IEA on or before the due date specified under sub-section (1) of section 139”, under Rule 21AGA(1)(a). Without a valid form filed by that date, the person is taxed under the default new regime for the year even if the old regime is ticked in the return. In practice this group files ITR-3 or ITR-4, the two returns that carry the business and profession head, and the acknowledgement number of the form is entered in the return.

A person without business or professional income exercises the option “in the return of income to be furnished under sub-section (1) of section 139”, under Rule 21AGA(1)(b). A Central Government employee, a pensioner, or anyone whose income is salary, house property, capital gains or income from other sources files no form, and may move between the regimes year by year without limit. This is the position of most readers of this site, and it is why the once-in-a-lifetime rule discussed below never touches them.

The split follows the statute rather than administrative convenience. Clause (i) of Section 115BAC(6) makes the business taxpayer’s option apply “to subsequent assessment years”, so it needs a durable record; clause (ii) makes the other taxpayer’s option an annual election attached to a single return, which the return itself records.

The threshold catches more people than it appears to. Gains from intraday trading and from futures and options are business income, and a freelance or consultancy receipt returned under the profession head is professional income. A salaried employee who also trades in derivatives, or who bills a small amount of consultancy on the side, has crossed into Rule 21AGA(1)(a) and must file the form to keep the old regime. The statutory test is whether the person has such income at all, not how much of it there is.

Due date for assessment year 2026-27

The due date for Form 10-IEA is the due date for furnishing the return under Section 139(1), and for a taxpayer with business or professional income in assessment year 2026-27 that date is 31 August 2026 where the accounts are not required to be audited. Section 5 of the Finance Act 2026 (No. 4 of 2026), which received the assent of the President on 30 March 2026, substituted Explanation 2 to Section 139(1) with effect from 1 March 2026 and replaced the old two-date scheme with a four-row Table.

Serial number 3 is the row that governs Form 10-IEA in the ordinary case, because the form is filed only by a person who has business or professional income. Serial number 4, the 31 July date that most filing calendars still print as “the” deadline, is the residual entry, and it reaches a Form 10-IEA filer only in the sense that it never does: a person with no business or professional income files no form under Rule 21AGA at all.

The determinant inside the business group is liability to audit under Section 44AB, not the return form and not the nature of the income. Two taxpayers filing the same ITR-3 can carry different due dates, one on 31 August 2026 and the other on 31 October 2026, according to whether the accounts must be audited. Where a person is caught by Section 92E, because of an international transaction or a specified domestic transaction, serial number 1 pushes the date to 30 November 2026 for the return and therefore for the form.

The form is also filed before the return, not merely by the same date, because the return requires the acknowledgement number and the date of filing of the form.

Consequences of missing the due date

Missing the Section 139(1) due date costs a business taxpayer three separate things, in ascending order of expense, and the late-filing fee is the least of them.

The first is the fee under Section 234F: Rs. 5,000, reduced to Rs. 1,000 where total income does not exceed Rs. 5 lakh. The second is the old regime itself. Clause (i) of Section 115BAC(6) makes the option available only where it is exercised on or before the due date, so a late Form 10-IEA is of no effect and the tax for the year is computed under the default new regime. For a taxpayer carrying deductions under Chapter VI-A, home-loan interest and house-rent allowance, that loss usually exceeds the fee by an order of magnitude.

The third is the carry-forward of losses. Business losses, speculation losses and capital losses cannot be carried forward where the original return is filed after the Section 139(1) due date; loss from house property survives, and nothing else does. For a trading client with a substantial capital loss, the eight-year consequence dwarfs the other two.

Misclassifying the due date compounds rather than adds. A taxpayer who assumes 31 October because ITR-3 is being filed, when the accounts are not in fact liable to audit under Section 44AB, files late against a 31 August date and loses the return and the form together.

The single permitted withdrawal, and when eligibility revives

A taxpayer with business or professional income who has opted into the old regime through Form 10-IEA may return to the new regime once, and once only. The proviso to Section 115BAC(6) is explicit: the option under clause (i), once exercised for any previous year, “can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise option under this section”. The withdrawal is itself made in Form 10-IEA, under Rule 21AGA(2). Two consequences follow from the wording. The withdrawal cannot be made in the same year the option was exercised, so the earliest exit is the following year. And after the withdrawal there is no route back into the old regime while the business or professional income continues.

The bar is not permanent in every case. The same proviso ends with an exception: “except where such person ceases to have any income from business or profession in which case, option under clause (ii) shall be available”. A person who has used the single withdrawal and later stops having business income altogether, on closing a practice or winding up a proprietorship, moves into clause (ii) and from then on chooses freely in the return each year, like any salaried taxpayer. Eligibility revives with the change in the character of the income, not with the passage of time.

The notified form makes the taxpayer acknowledge this in writing. The undertaking at the foot of Form 10-IEA includes a declaration that re-entering the regime under Section 115BAC(1A) “shall render the person referred to at serial no. 1 having PAN at serial no. 2 ineligible for opting out” of it again.

A salaried person or pensioner is under no such restriction, and the contrast is the sharpest one the form draws. Under clause (ii) of Section 115BAC(6) the choice attaches to a single return, so a government employee with only salary and pension income may be in the new regime for assessment year 2026-27, the old regime for 2027-28, and back again for 2028-29, with no form filed and no lifetime limit reached.

Whether the form is filed every year

Form 10-IEA is filed once, not annually. Clause (i) of Section 115BAC(6) provides that the option, once exercised, “shall apply to subsequent assessment years”, so a business taxpayer who filed the form for assessment year 2025-26 and remains in the old regime files nothing further for assessment year 2026-27. The old-regime status carries forward on the strength of the original filing until it is withdrawn.

A second Form 10-IEA is therefore filed in exactly one situation: to withdraw the option and re-enter the new regime. That filing is the single permitted switch, and item 5 of the form asks the taxpayer to state which of the two the current filing is, opting out or re-entering.

Contents of the notified form

Form 10-IEA is short, is addressed to the Assessing Officer, and carries eight numbered items followed by an undertaking. The notified text, as inserted in the Appendix to the Income-tax Rules 1962 by Notification No. 43/2023, asks for the following.

• Items 1 to 4: identity and year. Name, PAN, the status of the person referred to in Section 115BAC(1A), and the assessment year for which the form is furnished, in the format yyyy-yy. There is no field for Aadhaar and none for the taxpayer’s address in the body of the form.
• Item 5: the nature of the request. Whether the person is opting out of the regime provided under Section 115BAC(1A) or re-entering it. This single field decides which of the two jobs the filing does.
• Item 6: the earlier option, on re-entry only. Where item 5 records a re-entry, the form asks for the date on which the option to opt out under clause (i) of Section 115BAC(6) was exercised in Form 10-IEA, and the first assessment year for which it was exercised.
• Items 7 and 8: International Financial Services Centre Units. Whether the person has any Unit in an International Financial Services Centre as referred to in Section 80LA(1A), and, if so, the name, address and nature of activities of each Unit. The notified form asks item 7 only where item 5 records a re-entry, and the corresponding panel on the portal stays greyed out on an opting-out filing. Most readers can ignore both items.
• The undertaking. A declaration that the contents are correct and complete, that the signatory is competent to make it, and that the person has income under the head profits and gains from business or profession during the assessment year at item 4. On a re-entry the undertaking adds the acknowledgement of permanent ineligibility described above.

On the e-filing portal the same content is presented in three panels, Basic Information, Additional Information and Declaration and Verification, each saved in turn before the form is previewed.

Filing and verification on the e-filing portal

Form 10-IEA is furnished electronically. Rule 21AGA(3) requires it to be furnished “either under digital signature or electronic verification code”, and Rule 21AGA(4) makes the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) responsible for specifying the filing procedure, the data structure and standards for the electronic verification code, and the security, archival and retrieval policy for the forms furnished. The Aadhaar one-time password offered on the portal is one of the routes by which that electronic verification code is generated, not a third statutory mode.

The filing runs in this order.

1. Log in to the income-tax e-filing portal with the PAN and password.
2. Open e-File, then Income Tax Forms, then File Income Tax Forms, and select Form 10-IEA.
3. Select the assessment year, which is the year following the financial year of the income. For the financial year 2025-26 the assessment year is 2026-27.
4. Confirm the presence of income under the head profits and gains from business or profession, and select the due date applicable to the case, which is where the audit question at Section 44AB is answered.
5. Complete Basic Information, where the opting-out or re-entering status is pre-selected from the forms already on record, and save the panel.
6. Complete Additional Information, which carries the International Financial Services Centre details and stays greyed out on an opting-out filing, and save it.
7. Complete Declaration and Verification, preview the form, and proceed to e-verify by digital signature certificate or by an electronic verification code, including one generated through an Aadhaar one-time password.
8. Record the transaction identifier and the acknowledgement number from the success message, and file the income-tax return afterwards, quoting the acknowledgement number and the date of filing in it.

A filed form can be retrieved later from e-File, then Income Tax Forms, then View Filed Forms, which is where the acknowledgement number is recovered if it was not saved at the time.

Withdrawal and re-entry into the new regime

A business taxpayer who has been in the old regime and now finds the new regime cheaper returns to it by filing Form 10-IEA a second time, with item 5 marked as re-entering and item 6 carrying the date and first assessment year of the original opt-out. The arithmetic that usually drives the decision is the Section 87A rebate, which the Finance Act 2025 raised so that a resident individual under the new regime pays no tax on total income up to Rs. 12 lakh, a threshold the old regime does not have.

The decision deserves the computation rather than the intuition, because the door closes behind it. After the withdrawal, the person stays in the new regime for as long as the business or professional income continues, and no further Form 10-IEA can restore the old regime. The break-even guide and the income-tax calculator compute the tax both ways for a given deduction profile, which is the comparison the proviso to Section 115BAC(6) makes irreversible.

The withdrawal is subject to the same due date as the original option. It is an exercise of the machinery in Rule 21AGA, and Rule 21AGA(2) routes it through the same form on the same timetable.

Belated and revised returns

The old regime is not available in a belated return. Both limbs of Section 115BAC(6) are tied to Section 139(1): clause (i) requires the option on or before the due date specified under that sub-section, and clause (ii) requires it along with the return furnished under it. A belated return is furnished under Section 139(4), a different sub-section, so a taxpayer who misses the date is taxed under the default new regime whether or not a business is carried on. The belated-return window for assessment year 2026-27 runs to 31 December 2026, and filing inside it preserves nothing of the regime election.

A revised return does not repair the failure either, though the window is now longer. Section 5(b) of the Finance Act 2026 substituted Section 139(5) so that a revised return may be furnished at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier, which for assessment year 2026-27 means 31 March 2027 in place of the earlier 31 December cut-off. A revised return corrects an omission or a wrong statement in a return already filed; it does not extend the time limit in Section 115BAC(6), so an option that was not exercised by the due date cannot be exercised through it.

Form 10-IEA compared with Form 10-IE and with the return option

Three mechanisms have carried the regime election in six years, and they differ in direction, in the person they bind and in whether a separate form exists at all.

Form 10-IE was the artefact of a system in which the new regime was optional and had to be claimed. The Finance Act 2023 inverted that by inserting Section 115BAC(1A), and Form 10-IEA is the mirror image of the earlier form: same machinery, opposite direction. Item 6 of Form 10-IEA still reaches back to the earlier arrangement by asking for the details of an option exercised previously.

Replacement under the Income-tax Rules 2026

Form 10-IEA has no successor. The Income-tax Rules 2026, notified by the Central Board of Direct Taxes as G.S.R. 198(E) on 20 March 2026 under Section 533 of the Income-tax Act 2025 and in force from 1 April 2026, prescribe no equivalent form. Rule 136, headed “Exercise or withdrawal of option for new tax regime”, instead provides that the option to be exercised or withdrawn under the provisions listed in its Table, which include Section 202(4) for an individual, a Hindu undivided family, an association of persons other than a co-operative society, a body of individuals or an artificial juridical person, “shall be in the return of income to be furnished under section 263(1) for such tax year”.

The substantive rule survives the change in machinery. Section 202(4)(a) of the Income-tax Act 2025 reproduces the structure of Section 115BAC(6): a person with income from business or profession exercises the option on or before the due date under Section 263(1), the option applies to subsequent tax years, it “may be withdrawn only once for a tax year other than the tax year for which it was exercised”, and after that withdrawal the person “shall never be eligible to exercise the option under this sub-section, except where such person ceases to have any income from business or profession”, when the clause (b) route through the return becomes available. What changes is the paperwork, not the entitlement: from tax year 2026-27 the business taxpayer and the salaried taxpayer both make the election inside the return.

Assessment year 2026-27 is accordingly the last year for which Form 10-IEA is filed, and the filing season running to 31 August 2026 is its last ordinary use.

Assessment year 2026-27 and the change of statute

Assessment year 2026-27 is governed by the Income-tax Act 1961, not by the Income-tax Act 2025, even though the return is filed after the 2025 Act commenced. Section 536(2)(c) of the 2025 Act provides that the provisions of the repealed Act continue to apply to any proceeding pending on the date of commencement and to any proceeding initiated on or after 1 April 2026 “in respect of any tax year beginning before the 1st April, 2026”, and that such proceedings are carried out under the procedure in the repealed Act. Assessment year 2026-27 relates to the financial year 2025-26, which began on 1 April 2025. The option for that year is therefore exercised under Section 115BAC(6), in Form 10-IEA, under Rule 21AGA, on the Section 139(1) timetable set out above.

An option already exercised does not have to be exercised again. Section 536(2)(f) provides that “any election or declaration made, or option exercised, by an assessee under any provision of the repealed Income-tax Act and in force immediately before the commencement of this Act shall be deemed to have been an election or declaration made, or option exercised, under the corresponding provision of this Act”. A business taxpayer sitting in the old regime on 31 March 2026 on the strength of a Form 10-IEA filed in an earlier year continues in it under Section 202(4) from 1 April 2026 without any fresh filing, and the single withdrawal preserved by the proviso to Section 115BAC(6) becomes the single withdrawal preserved by Section 202(4)(a)(iii).

Common mistakes

• Working to 31 July. For assessment year 2026-27 the date that governs a non-audit business or professional taxpayer is 31 August 2026, under serial number 3 of the substituted Explanation 2 to Section 139(1). The 31 July date at serial number 4 belongs to taxpayers who file no Form 10-IEA at all.
• Reading the due date off the return form. ITR-3 does not imply 31 October. Liability to audit under Section 44AB decides between 31 August 2026 and 31 October 2026, and two taxpayers on the same return form can fall on either side of it.
• Filing the form when none is needed. A salaried person or pensioner with no business income has no occasion to file Form 10-IEA; Rule 21AGA(1)(b) puts that choice in the return.
• Filing the form after the return, or after the due date. The form precedes the return, because the return carries its acknowledgement number, and both must be within the Section 139(1) date.
• Filing it again every year. The option under clause (i) of Section 115BAC(6) applies to subsequent assessment years on its own, and a second form is a withdrawal, which spends the one permitted switch.
• Treating a small freelance or derivatives receipt as outside the rule. Once income is returned under the business or profession head, the old regime is available only through Form 10-IEA, whatever the amount.
• Expecting a revised return to fix it. The revised-return window for assessment year 2026-27 runs to 31 March 2027, but it corrects the contents of a return; it does not restore an option whose statutory time limit has passed.

Related Articles

• How to switch tax regime
• New tax regime
• Old tax regime
• Old versus new tax regime
• Section 115BAC
• Section 202 of the Income-tax Act 2025
• Income-tax Act 2025
• Finance Act 2026
• Section 44AB tax audit
• Belated return
• Section 234F late-filing fee
• Income tax slabs for AY 2027-28
• Tax regime break-even: when the old regime wins
• Deductions allowed in the new tax regime
• HRA exemption under Section 10(13A)
• Income tax e-filing step by step
• Income tax for government employees
• Income tax for pensioners
• TDS on salary
• Section 87A rebate
• Standard deduction
• Section 89 relief
• How to fill Form 10E
• Advance tax
• Central Board of Direct Taxes
• Income-tax calculator
• Central government employees in India

External references

• Income Tax Department: e-filing portal
• Income Tax Department (Acts, Rules and notifications)
• Central Board of Direct Taxes
• Department of Revenue, Ministry of Finance
• The Gazette of India
• Union Budget: the Finance Bill

References

1. Income-tax Act, 1961, Section 115BAC(6), clause (i) (exercise of the option by a person having income from business or profession, on or before the due date under Section 139(1), applying to subsequent assessment years), clause (ii) (exercise along with the return by any other person) and the proviso (a single withdrawal, permanent ineligibility thereafter, and revival of the clause (ii) option on ceasing to have business or professional income).
2. Income-tax Rules, 1962, Rule 21AGA and Form No. 10-IEA, inserted by Central Board of Direct Taxes Notification No. 43/2023 dated 21 June 2023, G.S.R. 452(E), the Income-tax (Tenth Amendment) Rules, 2023, applicable from the assessment year beginning on 1 April 2024.
3. Finance Act, 2026 (No. 4 of 2026), assented on 30 March 2026, Section 5, substituting Explanation 2 to Section 139(1) of the Income-tax Act, 1961 with effect from 1 March 2026 (due dates of 30 November, 31 October, 31 August and 31 July) and substituting Section 139(5) (revised return to the end of the assessment year).
4. Income-tax Act, 1961, Section 234F (fee of Rs. 5,000, reduced to Rs. 1,000 where total income does not exceed Rs. 5 lakh) and Section 44AB (accounts required to be audited).
5. Income-tax Act, 2025, Section 202(4) (the option, the due date under Section 263(1), the single withdrawal and the exception on ceasing to have business or professional income) and Section 536(2)(c) and (f) (the repealed Act continuing to govern a tax year beginning before 1 April 2026, and an option already exercised being deemed exercised under the corresponding provision).
6. Income-tax Rules, 2026, notified as G.S.R. 198(E) dated 20 March 2026 under Section 533 of the Income-tax Act, 2025 and in force from 1 April 2026, Rule 136 (exercise or withdrawal of the option for the new tax regime in the return of income furnished under Section 263(1), with no separate form prescribed).