Income Tax: Tax is being filed in the country through two types of tax systems. One is the new tax system and the other is the old tax system.
However, what happens if a taxpayer is unable to choose between the new and old tax regimes? Regarding this, now a notification has also been issued by the government department.
Income Tax
Now the Central Board of Direct Taxes (CBDT) has issued a new notification regarding the new tax regime. It states that if an employee fails to choose between the new and old tax regime, the employer will default to the new income tax regime and deduct tax deducted at source (TDS) under it. According to Finance Minister Nirmala Sitharaman, the new tax regime will be in default from the financial year 2023-24. Under this, CBDT has issued a circular regarding TDS deduction.
The Income Tax Regime
Notification states, “If the information is not furnished 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.” In this case the employer shall deduct tax at source on the income under section 192 of the Act at the rates provided under sub-section (lA) of section 115BAC of the Act.”
Tax It is the responsibility of the employer to ask the employee for information regarding the desired tax regime and after obtaining the information, deduct tax accordingly. In such a situation, let us know the difference between the new and old tax regime…
Under the new tax regime, the basic exemption limit has been increased to Rs 3 lakh. The amount of exemption under section 87A has been increased to a taxable income of Rs 7 lakh. A standard deduction of Rs 50,000 has also been introduced in the system. Salaried employees and pensioners can opt for standard deduction of Rs 50,000 under the new income tax regime.
Old Tax Regime
Those who want to continue with the old income tax regime will get exemptions like Section 80C, which can bring down the taxable income by up to Rs 1.5 lakh. There has been no change in the tax slab and basic exemption limit. The old tax regime also offered deductions on loans and health insurance premiums. Those who want to opt for the old tax regime will have to indicate the same every year.
