If you think you have made a mistake while selecting between new and old tax regimes then here is the way to switch back to the scheme you desire.
Through the Current Financial year’s Budget, Union Minister Nirmala Sitharaman announced the new tax regime as voluntary compliance. Taxpayers, especially employees are allowed to choose between the old and new regimes as per their preference.
As the protocol says at the beginning of every financial year the employees are required to inform their employer about the tax regime they wish to go with.
Latest Update
- Budget 2024 – The Finance Minister of India introduced several changes to the IT rules in the budget 2024. The tax slabs have been revised only under the new income tax regime.
Need Software for Easy ITR Filing
For instance, if you first wish to go with the old tax system but eventually find the new tax regime more beneficial for you then there is a way for you to switch to the new tax regime.
While Filing an ITR
The government has given the employees the choice between the old and the new tax regime. The decision normally has to be taken at the beginning of the financial year but in case if you have chosen the old tax regime but you find a new system much more beneficial for you then you can switch to the new system while filing the Income tax return
Anytime in the financial year before the ITR filing, you cannot switch to another regime.
Old Tax System V/S New Tax System
The new tax regime is the lower tax regime which means it has reduced rates of taxes but the system does not allow any tax reduction based on tax-saving investments like the old tax regime. On the other hand, the tax slabs under the old tax regime remain untouched but here you can avail deductions on tax-saving investments.
Tax Slabs Under the New Tax Policies
As per the new tax regime, no tax applies to income up to Rs 3 lakh per annum. Above that:
- A 5% tax is applicable on income from 3 lakh to 7 lakh per annum
- 10% tax is applicable on income from 7 lakh to 10 lakh per annum
- 15% tax is applicable on income from 10 lakh to 12 lakh per annum
- 20% tax is applicable on income from 12 lakh to 15 lakh per annum
- 30 % tax is applicable on income more than 15 lakhs per annum
Along with relevant cess and surcharges.
Read Also: A Summary of Tax Calculator with Pros Under New Tax Regime
What to do in Case of More Tax Outgo?
As per the laws, the employees have to choose between the old and the new tax regime and inform their employers about their choices, however, if one is not certain about the choice then he/she can certainly change his/her decision at the time of ITR filing.
In case the employee encounters that the tax deducted is more than the actual payable amount, then he/she can claim the refund (by filling online refund application) for that extra tax while filing the Income-tax refund.
