Income Tax Tips: If you choose a new tax regime by mistake, can you immediately switch to the old one?
Every year the new financial year starts from 1st April. All people of the salaried class have to file income tax returns for the last year. While giving details of their income to the Income Tax Department, their dues are either paid, or the excess tax deducted is demanded back. Till two years ago there was only one tax regime, but now there are two types of tax regimes. One is – the new tax regime, second is – the old tax regime. Salaried people have to choose one of these every year. The employer deducts the employee's tax according to this election. Some people choose the new tax regime, while others choose the old one. However, the problem arises when an employee has mistakenly chosen another option. As if I had to choose the old one, but chose the new one. This mistake happens to many people. What if such a situation happens to someone? Can that employee now change the tax regime?
There are two types of people who pay income tax. One is business class and the other is salaried class. The opportunities to choose a tax regime are also different for both of them. People earning income from business get a chance to change the tax regime only once. They can switch between the two tax regimes only once in a lifetime, not in a year.
On the contrary, salaried people can switch their regimes every year. Suppose, last year you paid tax as per the new tax regime, but this time you feel that it would have been better to choose the old tax regime, so you can switch. At the beginning of every year, the employee has to tell his employer under which regime he wants to get his tax deducted. The employee can choose either of the two as per his wish and the employer will have to deduct tax on the salary accordingly.
Can the regime be changed immediately?
In this new financial year, if you have chosen a new tax regime instead of the old one, then there is no need to worry. When you are filing the return for this assessment year, you will be able to choose the old tax regime. So can't the tax regime be changed immediately? When we talked to CA Prashant Jain about this, he said that a lot depends on your company. If the company policy is such that you can change it immediately, then you will be able to change it. Not if the company policy doesn't support it.
CA Prashant Jain said that if you want to get it changed immediately, then you can talk to your HR department and know the process. You may also get the opportunity to change the regime immediately after your and the HR manager's approval by sending an official email. Prashant Jain said that at the beginning of the financial year, you have given only one of two tax deducting arrangements to your company. The company will deduct tax on the same basis. This communication is only between you and your company, and not between you and the Income Tax Department.
Regarding this, CA Gaurav Garg said that you can change the tax regime at any time. The law allows you to do this. But you will have to see what your company's policy is on this. This can be done easily in small companies, but in big companies, if more people start making such demands, then the company may face problems, because once they have calculated your tax according to the new regime, now they have to Will have to be calculated according to the old regime. But the law gives you complete freedom in this regard.
The default is the new tax regime
For your information, let us tell you that in the general budget of 2023, the new tax regime has been made the default regime. If you do not choose any system at the beginning of the new financial year, your TDS will be deducted as per the new regime. Note this thing and while choosing the tax regime, keep in mind which tax regime you have to opt for.
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