Income Tax Regime: If you have mistakenly selected the new tax regime, can you immediately switch to the old tax regime? The information given by two chartered accountants on this may be useful to you.
Income Tax: Every year the new financial year starts from 1st April. All people of salaried class have to file income tax return for the last year. While giving details of their income to the Income Tax Department, their dues are either paid, or the excess tax deducted is demanded back. Till two years ago there was only one tax regime, but now there are two types of tax regimes. One is – new tax regime, second – old tax regime. Salaried people have to choose one of these every year. The employer deducts the employee’s tax according to this election. Some people choose the new tax regime, while others choose the old one. But the problem arises when an employee has mistakenly chosen another option. As if I had to choose the old one, but chose the new one. This mistake happens with many people. What if such a situation happens to someone? Can that employee now change the tax regime?
There are two types of people who pay income tax. One is business class and the other is salaried class. The opportunities to choose tax regime are also different for both of them. People earning income from business get a chance to change the tax regime only once. They can switch between the two tax regimes only once in a lifetime, not in a year.
On the contrary, salaried people can switch their regime every year. Suppose, last year you paid tax as per the new tax regime, but this time you feel that it would have been better to choose the old tax regime, so you can switch. At the beginning of every year, the employee has to tell his employer under which regime he wants to get his tax deducted. The employee can choose either of the two as per his wish and the employer will have to deduct tax on the salary accordingly.
In this new financial year, if you have chosen a new tax regime instead of the old one, then there is no need to worry. When you are filing the return for this assessment year, you will be able to choose the old tax regime. So can’t the tax regime be changed immediately? When we talked to CA Prashant Jain about this, he told that a lot depends on your company. If the company policy is such that you can change it immediately, then you will be able to change it. Not if the company policy doesn’t support it.
CA Prashant Jain told that if you want to get it changed immediately, then you can talk to your HR department and know the process. You may also get the opportunity to change the regime immediately after your and HR manager’s approval by sending an official email. Prashant Jain told that in the beginning of the financial year, you have given only one of two tax deducting arrangements to your company. The company will deduct tax on the same basis. This communication is only between you and your company, and not between you and the Income Tax Department.
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