Last Updated: April 12, 2023, 08:13 IST
The Central Board of Direct Taxes (CBDT) has issued a new notification regarding the new tax regime. If an employee fails to choose between the new and old tax regime, the employer will take the new income tax regime as default and subtract the tax deducted at source (TDS) under it. As per Finance Minister Nirmala Sitharaman, the new tax regime will be the default one from financial year 2023-24. In accordance with this, the CBDT has issued a circular regarding the TDS deduction.
“If intimation is not made by the employee, it shall be presumed that the employee continues to be in the default tax regime and has not exercised the option to opt out of the new tax regime. Accordingly, in such a case, the employer shall deduct tax at source, on income under section 192 of the Act, in accordance with the rates provided under sub-section (lA) of section 115BAC of the Act,” the circular said.
It is the responsibility of the employer has to seek information from the employee about the intended tax regime and deduct the tax accordingly after getting the information.
Differences between new and old tax regime:
Under the new tax regime, the basic exemption limit has been hiked to Rs 3lakh. The amount of rebate under Section 87A has been increased to taxable income of Rs 7 lakh under the regime. Standard deduction of Rs 50,000 has also been introduced in the system. Salaried employees and pensioners can opt for a standard deduction of Rs 50,000 under the new income tax regime. There are six tax slabs under the regime.
Those who wish to continue with the old income tax regime will get exemptions such as Section 80C, which can reduce the taxable income by Rs 1.5 lakh. The tax slabs and basic exemption limit remain unchanged. The old tax regime also offers deduction on loans and health insurance premiums. Those who wish to opt for the old tax regime must specify it each year.
Taxpayers must note that they cannot change the tax regime for a financial year once they have made a choice. They must choose the tax regime beneficial for them after weighing all the pros and cons.
Read all the Latest Business News here