Many salaried taxpayers wonder if they can change their tax regime at the time of filing ITR, even if their employer deducted TDS under a different regime. Today's Ask Wallet Wise query answers switch between old and new regime.
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For the last financial year, I had opted for the old tax regime with my employer, and accordingly, tax was deducted under the old regime. But now I notice that if I opt for the new regime while filing my ITR, I will save a lot of money. Kindly let me know if I can choose the new regime at the time of filing my ITR.
Expert Advice: The employer is required to deduct the appropriate amount of tax while paying salary to an employee as per Section 192 of the Income Tax Act. Employers must obtain a declaration from employees about the tax regime they wish to opt for and collect supporting documents during the year.
Under the new tax regime, slab rates are lower compared to the old regime, but employees have to forgo various exemptions and deductions such as HRA, LTA, and those under Sections 80C, 80CCD, 80D, 80TTA, etc.
The choice conveyed to your employer is valid only for TDS purposes and is not the final choice. The actual exercise of choosing between the two regimes has to be done by the employee at the time of filing the ITR. So, even if you had opted for the old regime with your employer, you can still file your ITR under the new regime.
So, you can exercise your final choice while filing your ITR. Though tax may have been deducted under old tax regime, you can still file your ITR under new tax regime. Since the new tax regime is the default option, you can opt the new tax regime even after the due date is over if you fail to file your ITR by the due date for any reason. Do note that in case you wish to opt for old tax regime, you have to file the ITR by the due date presuming you do not have any business income.
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