Confused about which Tax Regime to choose?

CA Garima Bajpai | Last updated: 13 April 2023

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Quick Summary

It's now compulsory for employers to ask employees which tax regime they prefer, with the New Tax Regime being the default if no choice is made. This article breaks down the key differences between the Old and New Tax Regimes, including exemption limits, rebate limits, standard deductions, and tax slab rates. It also details the various deductions and exemptions available under each system and provides guidance on how to choose the most beneficial regime based on your income and potential savings.

Why do you have to opt for a Tax Regime? CBDT (via circular no 04/2023) made it COMPULSORY for Employers to seek information from their Employees on which regime they wish to opt for? The Employer shall deduct TDS accordingly. If You FAIL to choose between the New and Old Tax Regime, the

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FAQ :

The CBDT made it compulsory for employers to ask employees which tax regime they wish to opt for, so they can deduct Tax Deducted at Source (TDS) accordingly.

If you fail to choose between the New and Old Tax Regime, your employer will default to the New Tax Regime and deduct TDS under it, which could result in a higher TDS outflow.

The basic exemption limit for the Old Regime is £2.5 Lakhs, while for the New Regime it is £3 Lakhs.

Yes, both the Old and New Tax Regimes offer a standard deduction of £50,000.

If you have no tax savings and deductions to avail, it is generally advisable to consider going for the New Tax Regime.

The Old Tax Regime might be more beneficial if you can avail deductions like Section 80C and also have a home loan, or if you have an HRA deduction to claim.