The new tax regime for the fiscal year 2020-21: Can you go back to the old tax system when filing ITR? The CBDT has clarified that the option when filing an ITR may differ from the information given to the employer by such an employee.
TR Filing: The new tax regime will apply for income earned during the 2020-21 fiscal year or for those who will apply for the assessment year 2021-22. Many taxpayers and TDS deductors were concerned about the timing of the implementation of this option by taxpayers as there are cases of withholding tax (TDS) deduction.
When should an employee inform his employer and what if someone changes options while filing an ITR?
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There may be instances when the employee announces to the employer that he will stick to the old new tax regime but when filing the ITR, he or she chooses to go with the new tax regime. Employers were unsure about how TDS would be cut.
To avoid real inconvenience in such cases, the CBDT has made it clear that ‘there is an employee or any other an employee other than income under the heading of profit and profit and wish to take up the option of discount rate under Section 114 BAC? The law may implicate the deductible as its employer for each year as intended and after knowing this information, the deductor can calculate his total income and make TDS accordingly.
However, under sub-section (1) of section 159 of the Act, this option may differ from the information provided by such employee to the employer at the time of filing the ITR return. This means that one can let the employer know about the alternative - the new tax regime or the old tax rules - and still choose to file an ITR considering that the employer has been offered an alternative. Effectively, you can switch between new and old tax systems when filing ITRs.
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As an employee, if you do not conduct any such investigation, the employer will create TDS without considering the provisions of Section 11B BAC of this Act. This means that the old tax regime will be applied in that case. Employees can still submit their investment declaration to the employer where Section 80C and other tax savings can be made.
The CBDT further clarifies that if someone applies for a new tax regime and the same information is passed on to the employer or deductor, it will be for the purpose of TDS of the previous year only and cannot be amended within that year.
In doing so, the tax liability must be borne in mind, as many taxpayers may be subject to larger taxes. Therefore, it is better to assume tax liability under both administrations and then inform the employer closely and be associated with it.
A new tax system has been introduced under Section 115 BAC of the Income Tax Act and new rates will be available under the new tax slab. Section 11B BAC inserted by the Finance Act 2020 provides that any income other than 'income from business or profession' as an individual, person, or Hindu undivided family can pay tax for the previous year at the time of filing income Section 139 of the Act Tax return (ITR) under sub-section (i). On 13th April, under Section 114 BC of the Income Tax Act, 1961, the Ministry of Finance clarified the alternative.
The new tax system will not have the most popular tax exemptions and rebates. However, the old tax regime will continue as there is no change in the tax rate or income slabs.
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