Informed HR Late About Your Tax Regime? Higher TDS Will Be Deducted Every Month—But This One Method Can Save You Money..

As April arrives, a recurring question inevitably circulates within offices among salaried employees: Should one opt for the Old Tax Regime or the New Tax Regime? Amidst this flurry of activity, many individuals tend to overlook HR emails, tax declaration forms, or payroll deadlines. Consequently, when their salary is finally credited to their bank accounts, they discover that an excessive amount of TDS (Tax Deducted at Source) has been deducted.

If you have found yourself in this situation, there is no need to panic; your money has not actually been lost. By following the correct procedure, you can reclaim these funds. However, before doing so, it is essential to understand exactly what the tax regulations stipulate for the Financial Year 2026-27 (Assessment Year 2027-28).

**Understand the Entire Scenario in 5 Key Points:**

*   Failure to inform HR of your chosen tax regime on time may result in higher TDS deductions.
*   The New Tax Regime now serves as the default option.
*   Employers deduct TDS based on an estimation of your annual income.
*   Any excess tax deducted can be reclaimed by filing your Income Tax Return (ITR).
*   Switching between tax regimes mid-year is subject to the company's specific policy.

**Which Regime Applies If You Do Not Inform HR?**

*   According to the regulations, the New Tax Regime is the default tax framework.
*   If an employee fails to communicate their preference to the employer, the payroll system will typically deduct TDS in accordance with the new regime.
*   However, the final tax liability is ultimately determined when you file your Income Tax Return (ITR).

**Why Is Excess TDS Deducted?**

*   Each month, your employer deducts tax based on an estimation of your projected annual income.
*   If you fail to provide the necessary information on time regarding:
*   Section 80C investments (PPF, ELSS, LIC, etc.)
*   Home Loan interest payments
*   HRA (House Rent Allowance) exemptions
*   Section 80D medical insurance premiums
*   ...then the payroll team cannot factor in these exemptions, which may result in a higher TDS deduction. Understand the Key Rules of the New Tax Regime
Standard Deduction of ₹75,000 for Employees and Pensioners
Rebate u/s 87A: Relief up to the Eligible Taxable Income Limit (Subject to conditions applicable under the New Regime)
Several Deductions are Not Available
Simplified Slab Structure
Note: The Old Regime offers different slabs and deductions.

Can the Tax Regime be Switched Mid-Year?

For Salaried Employees: This depends on the company's payroll policy.

Some Companies:

Allow a one-time selection at the beginning of the financial year.
Permit mid-year corrections.
Allow changes upon the submission of tax-saving proofs.
However, a salaried individual can make a final choice while filing their Income Tax Return, provided the applicable conditions are met.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.