Individual and HUF taxpayers should inform their choice of the New and Old Income Tax Slab Rates announced in Budget 2020 to the deductor – to ensure accurate TDS deduction.
How will the TDS be deducted?
At the beginning of the financial year, employees need to tell their employer if they wish to opt for the New Income Tax Regime. This will enable the employer to deduct TDS accurately.
In case the employee does not express the choice to opt for the Income Tax Regime at the beginning of the financial, then the employer will deduct TDS as per the Old Income Tax Slab rates.
Usually, at the beginning of the Financial Year, employees are required to disclose their planned investments and expenses to the employer through Form 12BB – so TDS is deducted accurately on their Salary.
(2/2)Employee to intimate employer of intention to opt for new concessional rates.Intimation so given will be applicable for the year &can’t be modified.However,employee will continue to have the right to exercise such option or continue with earlier scheme at time of filing ITR.— Income Tax India (@IncomeTaxIndia) April 13, 2020
What if I want to switch?
Once an employee opts for the New regime at the beginning of the financial year, the employee cannot change during the financial year.
However, an employee can change the option of Income Tax Rates while filing the Income Tax Return.
If the employee is having Income from Business and Profession – they cannot change the Income Tax Regime in the future financial years except in certain circumstances.
At the beginning of the financial year 2020-21 in April, Amit tells his employer – that he wants to opt for the New Income Tax Regime.
His employer deducts TDS accordingly as per the New Income Tax Regime during the year on his salary.
During the financial year in October, Amit wants to switch the Old Income Tax regime. But cannot until the end of the Financial Year when filing his Income Tax Return.
What are the Income Tax Slab rates for FY 2020-21?
|Income Range||Current Income Tax Rates||New Income Tax Rates|
|Up to INR 2,50,000||NIL||NIL|
|INR 2,50,001 to INR 5,00,000||5%||5%|
|INR 5,00,001 to INR 7,50,000||20%||10%|
|INR 7,50,001 to INR 10,00,000||20%||15%|
|INR 10,00,001 to INR 12,50,000||30%||20%|
|INR 12,50,001 to INR 15,00,000||30%||25%|
|Above INR 15,00,000||30%||30%|
Check out all the Income Tax Slab rates for FY 2020-21
Use the Income Tax calculator to check which Income Tax Regime is better for you
Can I opt out of New Scheme once opted in???
If I want to opt for the New regime but had told my employer that I am choosing the existing one, can I select new tax regime while filing ITR??
An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year.
However, individuals having business income are not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime.
Once they switch back, they will not be allowed to opt for new tax regime again.
If you have opted for old tax regime with your employer for TDS on salary, and plan to opt the new tax regime at the time of filing ITR, then you can do that by filling the new form i.e. 10-IE.
Can full-time traders claim expenses like Broker charges STT, GST + other expenses like computer buy for trading, internet connection bill etc under new tax slabs?
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