What’s changed in India’s tax regime options
India introduced the Income-tax Act, 2025, effective from 1 April 2026, replacing the old 1961 Act. (incometax.gov.in) Under this law, individuals with business income now have the one-time ability either to continue under the old tax regime or shift to the new regime, subject to satisfying the conditions and filing Form 10-IEA. (incometax.gov.in)
Key adjustments in ITR-4 for Assessment Year 2026-27
Several concrete changes for ITR-4 include:
- Two house properties allowed instead of one — you can declare income from up to two houses, easing the burden for those with more than one property. (incometax.gov.in)
- New field for unrealised rent (rent which cannot be realised) — helps taxpayers transparently report what they expected vs. what they received. (incometax.gov.in)
- Foreign retirement benefits disclosure — the requirement to report these has been removed in ITR-4. (incometax.gov.in)
Strategic Tax Planning under Regime Choices
| Scenario | Best Regime | Steps to take |
|---|---|---|
| You expect large deductions (home loan, business expenses, depreciation) | Old regime | File Form 10-IEA before due date, claim deductions under sections like 80C, etc. |
| Minimal deductions, simpler compliance | New regime | Stick to default new regime, but assess whether switching back (once in lifetime) makes sense. |
Example 1: A proprietor earning ₹40 lakh with high business expenses may benefit more under the old regime if expenses exceed increased tax slabs.
Example 2: Salaried individual with modest deductions could save on simpler filing under the new regime.
Compliance Tips
- Deadline alert: ITR-4 must be filed by 31 August 2026 for AY 2026-27. (incometax.gov.in)
- Choose wisely: Once you opt for the old regime under ITR-4, you can switch back once to the new regime—but after that, you cannot return to the old regime. (incometax.gov.in)
- Document everything: For unrealised rent, foreign retirement benefits, two house properties, interest, etc., maintain records in case of clarification or audit requests.
Real-world Action Steps
- Compare your tax under both regimes — use calculators (or advisory tools) to run after-tax returns.
- If going old regime, file Form 10-IEA properly before the ITR’s due date.
- Collect documentation for rent, foreign benefits, loan interest.
- For next year, monitor policy announcements — especially around housing and property income as rules evolve.
India’s recent reforms give more clarity and flexibility. The right regime depends on your income mix—business, salary, rental—and how many deductions you can realistically claim. Be proactive before the deadline to make the best choice for your financial year ahead.