This information will be helpful to you if you also hold a job. The Income Tax Department has issued a new directive for businesses and employed individuals. The employer will need to inquire about the employees’ preferred tax regime (old or new tax regime) for the current fiscal year, according to the Income Tax Department. Tax deduction (TDS) will therefore need to be made on the income.
Individual taxpayers have the choice of tax regime (old or new tax regime)
If the employee is unable to communicate the tax regime of his choice to the employer, the Income Tax Department has stated. In this case, the employer is required to withhold TDS from the employee’s pay in accordance with the new tax system outlined in the General Budget for 2023–2024. Individual taxpayers can decide whether they want to continue with the previous tax system that offered exemptions and deductions or switch to the new tax system.
Let us inform you that there is no exemption under the new tax regime.
Finance Minister Nirmala Sitharaman has mentioned lowering the tax slabs under the new tax system and making it the default tax system in the general budget she presented on February 1, 2023. The new tax system has lower taxes but no exemptions. In the previous tax system, all portions provided tax exemption.
The Central Board of Direct Taxes (CBDT) clarified
the tax deductions made by companies on employees’ salaries for the current fiscal year. The clarification states that the company must ask each of its employees about their desired tax structure. Additionally, TDS must be subtracted in accordance with the chosen tax system.
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