Income Tax Regime: The financial year 2023-24 has started. Employers are going to seek information from their employees whether they will adopt the new income tax regime or the old tax regime.
In such a situation, CBDT has issued a circular regarding the modalities of TDS deduction in 2023-24, in which it has been said that from the current financial year, the new income tax regime has become the default tax regime. In such a situation, the CBDT has told the employer that he must ask his employees whether they want to opt for the new tax regime or the old tax regime. All employees will have to inform their employer at the beginning of every financial year whether they want to opt for the new tax regime or the old tax regime.
CBDT has said in its circular that it is necessary to choose the option of new income tax regime or old income tax regime because on the basis of that the employer will deduct TDS on the income of the employee.
The Central Board of Trustees has clarified that if an employee does not inform this to his employer, then the default tax regime on that employee, which is the new tax regime, will be valid and TDS will be deducted from his income on the basis of that. In such cases, the employer will have to deduct TDS under section 192 on the income of the employee as per the tax rate of the new income regime.
Presenting the general budget for 2023-24, Finance Minister Nirmala Sitharaman had announced that the new tax regime will be considered as the default tax regime from the new financial year. The tax rate in the new income tax regime is lower than the old tax regime.
But in the new tax regime, no deduction is available on home loan interest and investment. Whereas in the old income tax regime, you can get tax exemption on Mediclaim by taking exemption on investment and home loan interest.
However, salaried taxpayers will have the option to choose either the new or the old tax regime while filing income tax returns, even if they have informed the employer to choose another option. Salaried taxpayers will have the option to choose either the new or old income tax regime every year. Whereas those who get income from business or profession can change the option of tax regime from one tax regime to another only once.
