Taxpayers should note that if you are an employee and cannot choose between the new and old tax regime, the TDS will be reduced at the rates of the new regime.
Taxpayers who want to opt for the old tax regime in order to retain their tax benefit must file a tax return.
Income tax: At the presentation of the EU budget on February 1, Finance Minister Nirmala Sitharaman announced changes to the new income tax regime.
Nirmala Sitharaman had announced that the new tax regime introduced by the government would be the default regime from fiscal year 2023-24.
Taxpayers who want to opt for the old tax regime in order to retain their tax benefit must file a tax return. But if you do not choose between the old and the new tax regime, it will have consequences for your withholding tax (TDS).
The rebate for the resident person under the new regime has been increased to Rs 7 lakh.
Taxpayers with an annual income of up to Rs 7 lakh will save Rs 33,800 in taxes after the finance minister increased the rebate under the new income tax regime.
While the new tax regime may offer some benefits, you will have to let go of many of the tax deductions and exemptions that were available under the old tax regime.
Deduction possible under old tax regime
1. Standard deduction: Rs 50,000 for salaried persons (also available in new tax regime)
2. Section 80 CCD (1B): Additional deduction of up to Rs.50,000 for deposited amount in NPS account.
3.Section 80TTA: This section provides deductions for an individual or a HUF of up to Rs.10,000 against interest income from a savings account at a bank, co-operative society or post office.
4.Section 80D: It deducts from the health care premium
5. Section 80G: Donations to eligible trusts and charities are eligible for deductions
6. Section 80C: Investments you make in EPF and PPF, ELSS, life insurance premiums, home loan payments, SSY, NSC and SCSS.
Taxpayers should note that if you are an employee and cannot choose between the new and old tax regime, the TDS will be reduced at the rates of the new regime.
A circular from the Central Board for Direct Taxes has made the matter clear. “If the employee does not report, it will be assumed that the employee remains subject to the standard tax regime and has not exercised the option to waive the new tax regime. Accordingly, in such case, the employer will withhold tax at source from the income under section 192 of the Act, in accordance with the rates set out in subsection (lA) of section 115BAC of the Act,” the notice said.
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