Employees in India choose between two tax regimes – the old regime and the new regime – based on factors that can potentially reduce their overall tax burden. Salaried employees have the opportunity to submit a declaration to their employer specifying their preferred tax regime. This might be done through internal portals, HR forms, or specific tax regime selection processes.
It’s important to note that this choice for TDS purposes can be made only once a year.
Can you change the tax regime while filing ITR?
You can still change your tax regime while filing your income tax return (ITR), regardless of what you opted for with your employer.
Also Read: Income Tax Return Filing 2024: Who Is Eligible To File ITR 1 Form? Check All Details Here
The new tax regime is the default option if an employee doesn’t provide a choice. Based on the employee’s selection, the employer deducts tax at source (TDS) from their salary throughout the year according to the chosen tax slab.
Can salaried employee change tax regime?
Salaried employees have the option to choose between the old and new income tax regimes while filing their ITR. The government introduced a new income tax regime in the Union Budget 2020, offering lower tax rates but with the elimination of most deductions and exemptions.
This applies even if you opted for the new regime for TDS (Tax Deducted at Source) throughout the year.
Taxpayers can opt for either regime based on their preferences and financial situation. However, once an individual selects a particular regime for a financial year, it cannot be changed during that year. You have to choose the regime that suits your financial circumstances best and stick with it for the entire financial year while filing your ITR.
Benefits:
This flexibility allows you to choose the regime that minimises your tax liability based on your income and deductions claimed.
Switching Regimes:
- No additional forms are required.
- Simply choose your preferred regime (old or new) within the ITR form itself.
It’s wise to evaluate both regimes (considering your deductions) before finalising your choice while filing the ITR.
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