SYNOPSIS: Employee needs to intimate his employer, which regime they want to opt. If intimation not made to employer, then the new tax regime will be default tax regime.
The Income Tax Department has clarified that employer should ask from his/her employee which regime they want to opt in the current financial year 2023-24 and deduct TDS accordingly. If employee does not inform his/her employer about the preferred regime, then employer will deduct the TDS as per the new regime announced in budget 23-24.
Individual Taxpayer have two options (Tax Regime)
- Old Regime
- New Regime
The individual taxpayers have options to select which regime they want i.e. the old or new regime. Under the old one exemptions and deductions are allowed however the new one which offers low tax rates but no exemptions and deductions.
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The Budget 2023-24 has announced that new regime as default one under section 115BAC of the IT Act, 1961. However the individual tax payers have option to switch from old to new.
On 5th April, Wednesday the Central Board of Direct Taxes (CBDT) has issued clarification at which rates TDS will bed deducted by the employer.
This option will provide relief to the taxpayers that, they can estimate tax liability and on that basis they can choose which is more beneficial tax regime and accordingly intimate to the employer to deduct tds.
So if you are a working professional then you should approach your employer and select the most suitable option for you.
This clarification was issued via circular No. 04 of 2023
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The CBDT Stated that:
In order to avoid the genuine hardship in such cases, the Board, in exercise of powers conferred under section 119 of the Act, hereby directs that a deductor, being an employer, shall seek information from each of its employees having income under section 192 of the Act regarding their intended tax regime and each such employee shall intimate the same to the deductor, being his employer, regarding his intended tax regime for each year and upon intimation, the deductor shall compute his total income, and deduct tax at source thereon according to the option exercised.
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