Failed to Inform Your Employer About Tax Regime? Can Employees Still Switch to Old Tax Regime:

Failed to Inform Your Employer About Tax Regime? Can Employees Still Switch to Old Tax Regime At the start of a new financial year, employees are generally asked by their employers to choose between the old and new tax regimes so that TDS (Tax Deducted at Source) can be accordingly deducted from their salaries. The TDS is deducted from the employee's salary as per his/her taxable income after considering eligible exemptions and deductions allowed under the selected tax regime. Employees are given a specific time limit to report on their chosen tax regime to their employers; if they fail, they are shifted to the new tax regime (as it has been set as the default regime in the tax system). Meaning, if the employee does not communicate about his/her preferences between the old and new tax regimes, their taxes are calculated using the new regime’s streamlined slabs and lower rates.

Also Read

Govt Increases Special Additional Excise Duty on Diesel from Rs 13.5 per Litre to Rs 14 per Litre

Can Employee Switch Between Old and New Tax Regime? Yes, employees are allowed to switch between the old and new tax regimes. Employers ask their employees about their preferences between tax regimes just for the purpose of tax deductions from their salaries paid by them, and the final choice of tax regime is made during the income tax return (ITR) filing. Meaning, employees can still shift to the old tax regime while filing their ITR and avail eligible deductions and exemptions even if they fail to disclose any preference to their employers and TDS is deducted under the new tax regime.

Also Read

Transport Operator’s Income Tax Appeal Dismissed After 754-Day Delay and Failure to Rectify Filing Defects

If you are filing your income tax return (ITR) using ITR 1 and ITR 2 forms, then you will be asked, "Do you wish to exercise the option u/s 115BAC(6) of opting out of the new tax regime (default is 'No')?" In this option, you will choose "No", and then your tax liability will be calculated as per the new tax regime; however, if you choose "Yes", then you will be switched from the new tax regime to the old tax regime, and your tax liability will be calculated as per the old tax regime. Limit on Switching Tax Regimes There is a limit to switching the tax regimes. It depends entirely on the nature of your income. Salaried employees can switch every year, while those with business or professional income are heavily restricted.