NEW DELHI: Employees will have to inform their employers if they want to opt for the old or the new income tax regime. If not done so, the new regime will apply to them by default, and TDS on their salaries would be cut accordingly.
The Central Board of Direct Taxes (CBDT) has clarified through a circular issued on 5 April 2023 that an employer needs to seek information from its employees which income tax regime they would opt for.
Employees are required to intimate their options to his employer at the beginning of each year and upon such intimation, the employer has to compute the employee’s income and deduct tax at source. The CBDT also clarified that such intimation from employees to their employer is for the purpose of TDS obligation. An employee can choose old or new regime at the time of filing returns.