Tax Regime Switching for Salaried Investors: A Simple Guide

Can You Switch Between Tax Regimes Each Year?

Yes! As a salaried person, you can freely switch between old and new tax regimes when filing your ITR every financial year.

Investment Income vs. Business Income

Your investments in shares and mutual funds generate:

• Capital gains (profits when you sell)
• Dividends (periodic payouts)

This is not “business income” — it’s investment income. Business income only applies if you’re officially a trader by profession.

What This Means For You

• As a salaried professional with investments, you have complete flexibility
• You can choose whichever regime benefits you most each year
• No limit on how many times you can switch
• No special restrictions apply to you

Choosing The Right Regime

• Old regime: Higher rates but allows deductions for investments, housing, etc.
• New regime: Lower rates, but most deductions not available

Bottom Line

Calculate your tax under both options each year and pick the one that saves you money. Your share and mutual fund investments won’t affect your ability to switch between regimes.