Rule 136: New-regime options exercised through the income-tax return
Rule 136 prescribes where the listed new-tax-regime option or withdrawal is made: in the income-tax return for the relevant tax year. The table links each provision to a specified class of taxpayer; it does not replace the substantive conditions in those provisions.
Official notified Income-tax Rules, 2026Need advice on Rule 136?
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Bare law
Rule 136 - Exercise or withdrawal of option for new tax regime
The option to be exercised or withdrawn under the provisions specified in column B of the following Table, by a person specified in column C thereof, for any tax year shall be in the return of income to be furnished under section 263(1) for such tax year:
Sl. No. Section Person 1. 199(3) Manufacturing domestic company. 2. 200(5) Domestic company. 3. 201(2) New manufacturing domestic company. 4. 202(4) Individual or Hindu undivided family, or an association of persons (other than a co-operative society) or a body of individuals, whether incorporated or not, or an artificial juridical person. 5. 203(5) Resident co-operative society. 6. 204(2) New manufacturing co-operative society.
Rule breakdown
Identify the correct taxpayer and provision
The table distinguishes manufacturing domestic companies, domestic companies, new manufacturing domestic companies, the listed individual and other non-company persons, resident co-operatives and new manufacturing co-operatives.
Match the taxpayer to the exact row. Similar commercial names do not make the statutory regimes interchangeable.
Record the choice in the relevant return
The option to be exercised or withdrawn under the listed provisions must be in the return furnished under section 263(1) for that tax year.
Check the relevant return fields and official filing instructions, and retain a copy showing the actual choice.
Parent-section restrictions still apply
The rule supplies the return-based mechanism. Eligibility, permitted withdrawal, conditions attached to business income and the continuing effects of an option come from the relevant parent section.
Do not infer a general right to switch every year simply because the rule mentions both exercise and withdrawal.
Check the choice before filing
Compare the applicable tax treatment and permitted deductions, confirm eligibility and the current return due date, and reconcile the selected option with the computation.
Where a previous election exists, review its continuing effect before choosing a different entry in a later return.
Key takeaways
Return-based mechanism
The listed choice is made in the section 263(1) return.
Six specified categories
Use the table row that applies to the taxpayer.
Substantive limits remain
The rule does not create an unrestricted annual switching right.
Practical checklist
- Match the taxpayer and statutory provision.
- Review prior elections and continuing conditions.
- Retain the return and tax computation.
Avoid
- Do not infer unrestricted withdrawal rights from the procedural rule.
FAQs
Does Rule 136 itself let everyone change regimes each year?
No. The parent provision controls whether and on what conditions the option or withdrawal is available.
Where is the listed option exercised?
In the income-tax return to be furnished under section 263(1) for the relevant tax year.
Does the individual-category row include co-operative societies?
That row excludes a co-operative society from its association-of-persons category; separate rows cover the stated co-operative categories.
Glossary
- Return-based option
- An election or withdrawal recorded in the relevant income-tax return under the listed provision.