Quick Summary
The Income Tax Department on Wednesday said employers will have to seek details from employees about their preference for tax regime in the current fiscal and deductTDSaccordingly. In case an employee does not intimate his/her employer about the preferred tax regime, then the employer would be required to deduct TDS from salary income as per the new revamped tax regime announced in Budget 2023-24. Official copy of the circular has been mentioned below Circular No. 04 of 2023 F. No.3701
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FAQ :
Employers must now ask each employee about their preferred tax regime for the current fiscal year to correctly deduct TDS from salary.
If an employee fails to intimate their employer, the employer will assume they are staying in the new, default tax regime and deduct TDS accordingly.
The new, revamped tax regime announced in Budget 2023-24 is the default regime.
This circular is applicable for TDS deductions during the financial year 2023-24 and subsequent years.
No, intimating your employer about your preferred tax regime does not count as formally opting out. You still need to exercise that option separately.
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