Demand notice from income tax due to wrong tax regime selected by department

@Quicko @Jason_Castelino

I have selected new regime while department has wrongly calculated via old regime. for AY-23-24

Can you help me what process need to be followed to rectify the demand to Nil?

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Hi @AlgoEye,

In case of income from business/profession, you were required to file Form 10-IE to opt for the New Regime. It might be a case that the form was not filed, the ITD has processed the ITR under the old regime.

In order to rectify this, you can now either pay the demand or file an updated return i.e. ITR-U under the old tax regime and claim all the deductions (if you had made any investments).

If you need a tax expert’s help in filing the updated return, you can book a MEET.

Thanks @Quicko for quick response

I don’t want to fill in old regime want to file only new regime

A. Last year i filled ITR2 and filled under new regime it was processed under new regime.
B. This year i filled ITR3 and i don’t think i filled form 10-IE. ( is 10-IE form required for ITR3 only?)

  1. Do we have to fill 10-IE every year? or only one time?

  2. Can i now fill 10-IE form and file revised or reprocess the form after filling 10-IE?

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I am think to do following:

  1. File 10-IE form now
  2. Rectification->income tax->Reprocess the return


  1. In Response to outstanding demand , will select ‘Disagree’ and select option:


@Quicko @Jason_Castelino Please advise on above

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I have done this only once. Subsequent years i think we need to mention the ID associated it ( not sure, and maybe it autopopulates ).

We don’t have to do this every year. I used ITR3 only.

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Hey @AlgoEye,

Form 10IE is mandatory to be filed in case of income from business/profession, i.e. whenever you file ITR-3 or ITR-4 and the details of the same are required to be mentioned in the ITR Form as well.

Moreover, with regard to filing Form10IE now, it will not be possible as the filing due date has passed.


Can i file itr2 in revised ? I filled itr3 , business income is just 20k rest major is salary income, so previously itr3 now itr2…

Last year also itr2 was filled.

@Quicko @Jason_Castelino

I can see in the system that i am able to fill form 10IE for assessment for AY 23-24 , shall i try this filling form and try reprocess?

So you will be concealing business income which you have once declared under original returns? Don’t do that.

It had to be done before the due date to file returns.

Rest of the things, are already clarified by Quicko before I could respond.

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No , i won’t conceal . i will put it in other income!

is it ok to convert Itr3 to Itr 2 now?

Yes. You can change. But your business income is in the nature of profits from derivatives right? That has to be reported under business income.

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Thanks, will file revised ITR then from ITR3 to ITR2 and file under new tax regime.

found below on ITR website.

The option to exercise the benefit under Section 115BAC, in case you have business income, can be claimed while filing the respective ITR form (ITR 1/ ITR 2).

I too have same issue. What did you do? Please let me know if I can file form 10IE and updated return with ITR-3

I filed ITRU with ITR2 as this has higest probablity to sort the issue.

Other option are:

  1. File itr3 with ITRU updated form with 10IE. CPC might reject this but you might get lucky as might be very hard conditions are not set for this.

  2. File Rectification request ( haven’t explored this option) as there are specific conditions to do it.

  3. Meet income tax commissioner where your AO is or email write a letter to them that you forget to fill 10ie, and its due to lack of awareness .They might sort things offline.

Everything is system generated (CPC) so you might have game it with conditions to get things proceesed. I had to spend whole day :sleepy: and talk to different experts and hit and try to get it done. I hope it gets processed tomorrow , fingers crossed.

There is issue in itr utility so use excel utility for itru.

Thank you very much AlgoEye. How did you show your derivative income in ITR-2?

e Any other income (please specify nature)
FnO trading

Thank you. Please let me know any update on your processing. I will also close in similar way. Ideally for F & O income, they should not consider it as business or profession income for salaried class who have small profits.

Yeah, Ideally they should not have 10-IE form at all. Nothing new information is asked that’s not there in ITR. Our income tax is most complex unnecessary system/rules with way too many if and buts and dates and what not. Only honest payers get sucked .Waste of time, productivity of the country( its way better now but long way to go!).


Also, from next FY, they have made new Tax Regime as the default one and interestingly you will have to file from 1OIE if you want to use old tax Regime.

Time to file revised ITR is over.