Intimate Your Employer about Tax Regime You Want To Choose (For FY 2020-2021)
1. For Slab Rates which are applicable in New – Old regime and which regime is better for you please check our previous Blog “Analysis of Tax Slabs changes for Individuals and HUF In Budget 2020” Dated 05/02/2020 or Click Here
2. The Central Board of Direct Taxes (CBDT), issued a circular Dated 13th April, 2020, As per the Circular, an employee having income Other than the business income (such as Salary Income etc.) will have to inform his/her employer of his/her choice of tax regime for the on-going FY 2020-21. The employer will have to deduct taxes from the employee’s salary accordingly.
As Per The Circular, “An employee, having income other than the income under the head “profit and gains of business or profession” and intending to opt for the concessional rate under section 115BAC of the Act, may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of section 115BAC of the Act.
Also, once the choice of tax regime has been communicated to the employer, the employee Cannot Change the Choice of Tax Regime during the financial year. However, an employee will have the option to switch the tax regime at the time of filing tax return (ITR) “means option at the time of filing of return of income under sub-section (1) of section 139 of the Act could be different from the intimation made by such employee to the employer for that previous year”
The CBDT Circular has clarified that unless communicated by an employee, the employer should deduct taxes from salary income as per the existing/old tax regime. This would mean that if you have not communicated your decision for a particular tax regime in the Month of April, then your employer will continue to deduct TDS as per the existing/old tax regime. If you communicate your choice of new tax regime to your employer in the Month of June, then TDS from June till the end of the financial year will be deducted as per the new tax rates subject to any adjustment for excess TDS deducted for April and May which can be made by the employer