Income Tax: You can file ITR 2025 under the old tax regime for THESE reasons | Mint

Filing ITR 2025: As income tax (I-T) return filing season is back and taxpayers are ready to file their income tax return, you must choose one of the two tax regimes: old tax regime and new tax regime. Some taxpayers are confused as to which regime is better over the other.

Here we give reasons for why the old tax regime is better over the new tax regime. To be able to decide which regime is better than the other, one must consider the following factors.

Choosing old tax regime

I. Tax deductions: When you want to claim income tax (I-T) deductions which you are entitled by virtue of your investments, then you are recommended to opt for the old tax regime. On the other hand, if you have not invested in the tax-saving instruments (chapter-VIA deductions) such as under section 80C, 80D, 80DD, 80G, then you can go for the new tax regime.

The only deductions permitted in the new tax regime are deductions under sections 80 CCD (2), 80CCH and 80JJAA as per the provision of Section 115BAC of the Income Tax Act.

2. HRA exemption: Another criterion that has a bearing on your choice of tax regime is HRA exemption. As a salaried employee when you are entitled to claim a large sum of HRA exemption, you should opt for the old tax regime.

The income tax portal clearly mentions that under the old tax regime, House Rent Allowance (HRA) is exempted under section 10(13A) for salaried individuals, but this exemption is not available in the new tax regime.

3. Deduction of interest on borrowed capital: Another factor which casts a shadow on the choice of tax regime is the deduction of interest on borrowed capital. Interest on borrowed capital for Self-occupied property is not permitted as a deduction from Income from House property.

Therefore, if you want to claim deduction of interest on borrowed capital for SOP, then you must opt for Old Tax Regime by selecting ‘Yes’ in ITR 1 / ITR 2 or ‘Yes, within due date’ option in ITR 3 / ITR 4 / ITR 5 in the field provided for ‘opting out option’ in the ITR Form.

How to opt out of the new tax regime?

To be able to file income tax under the old tax regime, you must opt out of the default regime. It is required for the taxpayers to submit Form 10-IEA to opt out of the default regime.

Only those taxpayers who file ITR-3, ITR-4 or ITR-5 have to submit Form 10-IEA if they have business income. Individuals who file their tax returns in Forms ITR-1 or ITR-2 are not supposed to submit Form 10-IEA.

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