New Income Tax Bill: Can you still opt for the old tax regime for FY26?

This decision has significant implications for individuals and businesses, directly impacting their tax liabilities.

With the new Income Tax Bill set to take effect from April 1, 2026, an important question arises for taxpayers: Can they still opt for the old tax regime for FY26? This decision has significant implications for individuals and businesses, directly impacting their tax liabilities. In this piece, we examine the provisions of the new Income Tax Bill and analyse whether the option to choose the old tax regime will still be available for FY26.

CA (Dr.) Suresh Surana says, "Even after April 1, 2025, taxpayers can still opt for the old tax regime and claim deductions and exemptions for FY26. The old tax regime remains available as an option, allowing individuals to benefit from deductions and exemptions. However, taxpayers must explicitly choose the old regime while filing their income tax return; otherwise, the default will be the new tax regime. Furthermore, it is important for taxpayers to analyse the tax implications under both regimes before making an informed decision."

Taxpayers must evaluate which tax regime—new or old—is more beneficial, considering the availability of exemptions and deductions under each. The old tax regime allows for multiple exemptions and deductions, such as House Rent Allowance, Leave Travel Allowance, employee Provident Fund contributions, repayment of the principal amount of a housing loan, life insurance premiums, and medical insurance premiums, which are commonly claimed by individual taxpayers.

Deepashree Shetty, Partner, Global Employer Services, Tax & Regulatory Services, BDO India, says, "A salaried taxpayer who has been under the new tax regime for the tax year is still eligible to opt for the old tax regime until the filing of the tax return, due by July 31, 2025. However, such individual taxpayers must not have income from business or profession."

The proposed changes in the recently announced Finance Bill 2025 do not introduce any significant modifications to the old tax regime. Moreover, the Bill is yet to receive the Hon’ble President’s assent. Therefore, individual taxpayers can still opt for the old tax regime for FY 2025-26.

"Even the new Income Tax Bill 2025 includes provisions allowing individual taxpayers to choose between the old and new tax regimes under the proposed new tax law. Once approved, the new tax law is expected to take effect from April 1, 2026," adds Shetty.

Source:-  Fortune India