If you wish to opt for the new tax regime, you will have to inform your employer through the declaration form. The employer will start deducting tax at source (TDS) accordingly for each month.
Employers will soon start rolling out investment declaration forms, asking employees to indicate their choice of tax regime. The government had introduced a revised tax system in this year’s Budget, wherein taxpayers would be given the option to shift to a new tax regime with lower tax rates, but without the usual tax exemptions and deductions. The Central Board of Direct Taxes issued a circular on April 13, 2020, directing all employers to obtain a declaration from employees if they wish to opt for the new tax regime. Here is what employees should keep in mind.
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If you wish to opt for the new tax regime, you will have to inform your employer through the declaration form. The employer will start deducting tax at source (TDS) accordingly for each month. In other words, TDS on salary will be deducted as per the estimated total tax calculated under the new lower tax rate regime instead of as per the estimated tax calculated under old tax regime.
Source: Economic Times
