The employer is required to seek clarification from his employee regarding TDS deduction. Now employers will not be able to do this arbitrarily.
This clarification will be regarding consent on the option of regime election. The Central Board of Direct Taxes has also issued guidelines in this regard. The Finance Ministry has given taxpayers the option of two tax regimes for the financial year 2023-24. Taxpayers can choose one of these tax regimes. Let us tell you that the new tax slab is the default, so the salaried taxpayers who like the tax slab of the old tax regime will have to choose the old tax regime.
The Central Board of Direct Taxes has said that employers should clarify with their employees about choosing the tax regime and only then deduct TDS. Because, in the old tax regime, the facility of exemption and deduction on investment will be available as before. Whereas, the tax slabs are less in the new tax regime, but there is no exemption.
In such a situation, salaried taxpayers want to get the benefit of exemption under investment, then they will have to choose the old tax regime. If they want to avoid tax on annual income of 7 lakhs, then they will have to choose a new tax regime. Therefore, before deducting TDS, the employer is required to seek clarification from his employees on the decision of tax regime election.
Tax slabs and tax rates under the new tax regime
- Tax rate zero percent tax on earning Rs 0-3 lakh
- 5% tax on Rs 3-6 lakh
- 10% tax on Rs 6-9 lakh per annum
- 15% tax on earning Rs 9-12 lakh
- 20% tax on annual income of 12-15 lakhs
- 30% tax on 15 lakh income
ax slabs and tax rates under the old tax regime
- Zero percent tax on income up to 2.5 lakhs
- 5% tax on annual income from 2.5 lakh to 5 lakh
- 20 percent tax on earning 5 lakh to 10 lakh
- 30% tax on annual income above 10 lakhs
