April marks the beginning of a new financial year, when several new income tax laws come into effect. For FY23-24, to make the new income tax regime more attractive, the government has revised the income tax slabs under the new tax regime. Benefits like introduction of standard deduction, zero tax on taxable income 7 lakhs have also been introduced this year.
Individual taxpayers have the option to choose whether they wish to remain in the old tax regime, which offers exemptions and deductions, or switch to the new tax regime, which offers lower tax rates but no exemptions.
What happens if an employee forgets to inform his employer about the preferred tax regime?
If an employee does not inform his employer about the preferred tax regime, the employer has to deduct TDS From salary income as per the new revised tax regime announced in Budget 2023-24.
The recent instructions from CBDT have asked the employers to consult the employees regarding their preferred tax structure for computing their total income and TDS. Amit Gupta, managing director, SAG Infotech, said that at the end of the month, employees should inform their employers about their preferred tax structure. If they do not do so, their employer can withhold TDS under the new Income tax system, which could lead to lower monthly wages for those who have investments that allowed them to claim significant deductions under the old system. Tax withheld at source by the employer at the rates mentioned in section 115BAC paragraph 1(a).
When filing their ITR, employees can change their tax status, but neglecting to inform their employer before April 15 can cause problems. If you work for a company, the accounting or payroll department may send you an email asking about your preferred tax structure for fiscal year 2023-2024, he said.
income tax slab under new tax regime
Under the new tax regime, there will be no tax for those whose annual income 7 lakhs. a standard deduction of 50,000 has also been allowed and the basic exemption limit has been increased 3 lakhs.
income between 3-6 lakhs will be taxed at 5 per cent; 6-9 lakhs at 10 percent, 9-12 lakhs at 15 percent, 12-15 lakh more income at 20 percent 15 lakh and above will be taxed at 30 per cent.
The basic exemption limit of the old tax regime, which allows exemptions and deductions, is 2.5 lakhs. Also those who have annual income No tax has to be paid on 5 lakhs.
income between 2.5 lakhs and 5 lakh is taxed at 5 per cent, while between 5 lakh more 10 lakh is taxed at 20%. above income 10 lakhs is taxed at 30%.
So, all those persons who have not yet opted for new or old tax regime, please do it now, otherwise, by default it will be new tax regime only for you.
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