Salaried taxpayers who want to claim deductions will have to specifically opt for the old income tax regime. This is because the new income tax regime has become the default option starting from the current financial year.
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Individuals who want to opt for the old income tax regime have to inform their employer at the beginning of the financial year.
“If you are a salaried individual in India, as per CBDT, you are required to choose between the old tax regime and the new tax regime and notify your employer at the beginning of the financial year,” said Abhishek Soni, co-founder & CEO of Tax2win.
But what happens when a salaried person does not inform their employer about their preference on time or forgets to do so? In such a scenario, the employer will assume that the employee has opted for the new regime, based on which tax will be calculated and TDS will be deducted.
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But if an individual does not intend to continue under the new tax regime, he/she can choose the old tax regime while filing income tax return (ITR).
“If you missed informing about your preferred tax regime at the start, you can still choose it while filing your income tax return,” Soni said.
In a situation where an individual has missed choosing the old tax regime and has not made any income declarations for claiming deductions and exemptions, the employer will deduct taxes based on the new regime.
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However, the individual still has the option to claim a refund for the excess tax deduction while filing ITR. “You can do this by filing an income tax return and reporting the correct details of your income and tax deductions,” Soni said.
