How to switch your Income Tax Regime : The government has made the New Income Tax Regime the default from April 1, 2023, i.e. the beginning of the financial year 2023-24. This means that if you have not formally informed your employer to opt for the old tax regime, then you will automatically be put in the new income tax regime. In such a situation, your employer will deduct TDS from the salary on the basis of the new tax regime. If you are also among those people who have been put in the new tax regime due to not paying attention to this requirement or you want to change your option chosen at the beginning of the year and now choose the old tax regime, then here The information being given is of your use.
What is your employer's policy?
In the circular issued by the Central Board of Direct Taxes (CBDT) in this regard in April 2023, it is not clear whether a salaried employee can change the tax regime chosen at the beginning of the financial year or during the same financial year. No. That is, if an employee has chosen the new tax regime in April 2023, the circular is silent about whether he can change it to the old tax regime in February 2024 or not. But tax experts believe that employees can change their tax regime even during the financial year depending on the policy of their company or employer. But what to do if an employer does not allow his employees to change the tax regime during the financial year?
Also read: SSY: Get Rs 70 lakh from Sukanya Samriddhi Yojana, that too completely tax-free!
You can choose tax regime even while filing ITR
The current income tax law allows a person to choose between the old or new tax regime while filing income tax returns. That is, whatever tax regime the taxpayer has chosen for deduction of TDS at the beginning of the financial year, he can choose the tax regime afresh while filing the return. It has been made clear by CBDT that whatever option the employer asks his employee to choose regarding his preferred tax regime, its purpose is to deduct TDS. But the tax regime chosen at the time of filing income tax return may be different from that. That is, even if an employee had asked his employer to choose the default tax regime (New Tax Regime), he can still choose the old tax regime while filing the income tax return.
Also read: Investment Planning: Make the best investment plan like this, do not invest anywhere just for tax saving.
How to switch tax regime while filing ITR?
The Central Government has introduced the new tax regime in the Budget 2020 under Section 115BAC of the Income Tax Act. This section allows all those taxpayers who do not have any business income to choose the tax regime for every financial year while filing income tax returns. Salaried employees can make this choice every year, but those with business income do not have the option to choose it again once they exit the new tax regime.
What is given in the new ITR form
CBDT has released the income tax return forms for the financial year 2023-24 (AY 2024-25). While filing returns in this form, the question asked is, “Do you want to opt out of the new tax regime by opting for the option given under section 115BAC(6)?” Its default answer is “No”. That means if you do not change the default answer, you will remain in the new tax regime. But if you want to select the old tax regime, then you will have to select “Yes” in response to the question asked above, so that the Income Tax Department will understand that you want to select the old tax regime. After this, your income tax liability will be calculated as per the tax slab of the old tax regime.
Also read: Double strategy of SIP+SWP: Will be chic after 60, will get huge amount every month
What should those with business income do?
If you do not belong to the salaried class or have business income apart from your job, you can still opt out of the new tax regime and switch to the old tax regime. But for this you have to file the section before the last date of filing income tax return. under 139(1) The option given in Form No. 10-IEA will have to be used. But such people do not have the freedom to choose the tax regime every year like the salaried class.
Also read: UPI International: Now you can make payment through UPI in these countries also, avail the benefit of this facility like this
Keep these things in mind while changing the tax regime
If you are planning to switch from the new tax regime to the old tax regime at the time of filing income tax returns, you must complete all your tax saving investments and expenses by March 31, 2024. Only then will you be able to take full advantage of all the tax exemptions available in the old tax regime for the financial year 2023-24 (AY 2024-25). Apart from this, you will also have to keep the proofs of all these safe with you, because Form 16 and TDS certificate given by your employer will not mention them. Therefore, you will have to fill all these details separately in the ITR form and provide all the proofs when asked by the Income Tax Department. Whereas if this change is made from old to new tax regime, then you can get only two deductions as compared to all the exemptions available in the old regime – first, standard deduction from salary or pension and second in NPS Re Tier-1 account. Employer's contribution. Both these exemptions are also available in the old tax regime, so even if you had earlier chosen the old regime, they should still be mentioned in your Form 16.