Individuals should remember that TDS on salary is deducted as per the applicable tax slab rates on your income whereas TDS on say interest income from fixed deposits is deducted at only 10%.
The Central Board of Direct Taxes (CBDT), via a circular dated April 13, has clarified that employers will have to deduct TDS from salary for FY2020-21 as per the tax regime – new or old – chosen by the employee. If an employee wants to go for the new tax regime he/she must inform the employer of this else by default TDS would be deducted as per old regime tax rates.
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Remember, TDS on salary is deducted as per the applicable tax slab rates on your income whereas TDS on say interest income from fixed deposits is deducted at only 10%.
Also, once the choice of tax regime has been communicated to the employer, the employee cannot change the choice of tax regime during the financial year. However, an employee will have the option to switch the tax regime at the time of filing tax return (ITR), the circular stated.
Therefore, here are four things you should consider when choosing your tax regime for TDS from salary for this financial year.
Source: Economic Times