In the budget presented on February 1, 2025, Finance Minister Nirmala Sitharaman directly excluded income up to Rs 12 lakh from the scope of income tax. Crores of taxpayers will benefit from this. This step will provide great relief to those taxpayers who were still taking tax exemption from options like investment and home loans under the old tax regime. Such taxpayers will no longer have to struggle much to save tax and will be able to save tax by adopting the new regime without any problem.

Everyone has understood that shifting to the new regime will help taxpayers save tax on income up to Rs 12.75 lakh. But, most people do not know how to shift from the old tax regime to the new regime and when is the time for this. Before understanding this process, it is important to know that a salaried person gets a chance to change the regime every year, whereas taxpayers doing business get this opportunity only once.

If you want to choose a new regime then…

If a taxpayer was saving his tax through investment and deduction in the old regime and he wants to come to the new regime, then there can be two ways for this. Firstly, a salaried person will have to give this information to his employer only when the new financial year starts. If he does not give the information at the beginning of the new financial year, then the information about the choice in the new tax regime can be given while filing the ITR.

For those doing business
If someone is a businessman, then he will get a chance to choose the income tax regime only once. For this, it will be necessary to choose the prescribed form. Those doing business do not need to choose their tax regime at the beginning of the financial year. When he files his ITR, he will also have to provide information about the regime chosen by him in the form.

Keep these things in mind before changing the regime.

Make a list of investments and expenses made during the financial year on which you want to claim income tax exemption.

Evaluate the amount of expenses or investments that were deducted/exempt under the old tax system, which are not eligible under the new tax system.

Prepare a comparative chart to compare the tax liability under the old tax system and the new tax system. In this context, you can use the tax calculator available on the income tax website.

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