Want your employer to deduct TDS from your salary as per the new tax regime? You need to intimate your employer about this or he will continue to deduct TDS as per the old regime. New tax regime has been introduced through the Finance Act 2020. Sameer Mittal, Managing Partner, Sameer Mittal & Associates LLP, says that Finance Act 2020 has not just bought relaxation in Income tax slab rates for Individuals and HUF but also brought altogether a new tax regime them.

Individuals and HUF have now a new option for paying tax, subject to the condition that total income shall be computed without specified exemption or deduction, set off of loss and additional depreciation, Mittal told FE Online.

Options for Employees

Mittal said that in the new financial year, employees have two following methods to choose for their desired tax regime:

  • Declaring their applicable option to employer
  • Opting at the time of filing income tax return

“Central Board of Direct Tax (CBDT) has issued circular in this regard to provide the clarification that an employee, having income other than business income and willing to opt for new tax regime may intimate his deductor( employer) about exercising the option in each year and deductor may deduct his/her tax according to new tax regime. Further, in case no declaration given by employee, then employer can deduct TDS as per old tax regime,” said Mittal.

In financial year 2020-21, an individual and HUF has following two tax slab rates at their option to choose:

The CBDT has also clarified that the option once availed in the year cannot be modified during the year.

“But with this restriction of no modification option available, government has given relief by clarifying that such intimation to employer will not amount to exercising the option. That means, you will still have a chance to exercise the option of new tax regime while filing you income tax return, if you have not opted the same by declaring to your employer,” said Mittal.

Hence, every employee has the option to avail the new tax regime at the beginning of the year by giving intimation to employer and also again at the time of filing income tax return as well, he concluded.