Deductor/Employer to Intimate Employees on opting New Tax or Old Tax regime for TDS deduction: CBDT Clarifies [Read Circular]
Deductor – Employer – Employees – opting – Tax – CBDT – Clarifies – TAXSCAN
Deductor – Employer – Employees – opting – Tax – CBDT – Clarifies – TAXSCAN
As the new tax regime has been announced by the Central Government, the taxpayer has the option to choose under which regime they are ready to pay the tax. The same is provided under the section 115BAC (6) of the Income Tax Act, 1961.
The Central Board of Direct Taxes (CBDT) through a notification issued on 5th April 2023 clarified the deduction of the Tax Deduction at Source (TDS) under Section 192 read with section 115BAC of Income Tax Act under two different tax regimes.
The Finance Act, 2023 inserted the section 115BAC to the Income Tax Act to provide a new tax regime (default regime) for the coming assessment years. The new tax regime applies to an individual or Hindu undivided family or association of persons [other than a cooperative society] or body of individuals, whether incorporated or not, or an artificial juridical person.
The intent of Section 115BAC is to require that the total income of the person be calculated at the rates given in Section 115BAC (1A), subject to a number of requirements, one of which is that the person not take advantage of any of the specified New Tax Era Exemptions and Deductions.
As per the notification, many representations have been received from the employers in which they don’t know on which regime the TDS on the salary income has to be deducted.
To circumvent this, the government has now stated that the employer or the deductor may ask directly to the employees having income under section 192 of the Act regarding their intended tax regime.
Each such employee shall intimate the same to the deductor, being his employer, regarding his intended tax regime for each year. Upon intimation, the deductor shall compute his total income and deduct tax at source thereon according to the option exercised.
It was also clarified the if the employee fails to intimate it to the employer, then it shall be treated under default tax regime (new tax).
To Read the full text of the Order CLICK HERE
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