TDS DECLARATION

Yes—for employees covered by salary TDS, the employer should seek the employee’s intended tax regime every year. CBDT Circular No. 04/2023 says the employee can intimate the regime to the employer each year, and if no intimation is given, the employer should treat the employee as staying in the default new regime and deduct TDS accordingly.

For your second point, if no TDS was deducted because the employee’s estimated salary was not taxable under the applicable slab, you generally still file the quarterly salary TDS return (Form 24Q) if salary was paid during that quarter; in practice, this is usually filed as a nil / zero-deduction return for those employees so their salary appears in the TDS system and Form 16 can be generated properly.

What this means in practice

· Employee declaration: Collect it each financial year; the earlier declaration is not a permanent choice for TDS purposes.

· No declaration: Deduct TDS using the default new regime for salary TDS.

· No TDS due to slab: If salary was paid but tax was not deductible, a nil 24Q is generally filed for compliance and reporting purposes.

Important nuance

The employee’s intimation to the employer is not the same as exercising the final regime option in the income tax return; CBDT expressly says that it does not amount to the final option under section 115BAC(6). So an employee may tell the employer one thing for TDS and still choose differently when filing the return, subject to the law.

Practical recommendation

For payroll compliance, keep a fresh annual regime declaration from each employee, even if they gave one last year. For employees with zero TDS deduction, file the quarterly salary return in the normal due date cycle and issue Form 16 only where applicable under your payroll/TDS workflow.