Wondering can we change tax regime every year for salaried employees? Yes, taxpayers in India can choose between the old tax regime and the new tax regime every year while filing their income tax returns.
Offers various deductions and exemptions such as those under Section 80C (investments), Section 80D (medical insurance), HRA (House Rent Allowance), and others. Tax rates are higher compared to the new tax regime.
Introduced in Budget 2020. Offers lower tax rates but does not allow most of the deductions and exemptions available in the old regime. Taxpayers must forego benefits like standard deduction, HRA, and deductions under Section 80C, 80D, etc.
Can We Change Income Tax Regime Every Year?
Salaried Individuals: Can choose between the old and new regimes each financial year. They need to inform their employer about their choice at the beginning of the financial year.
If not informed, the employer will deduct tax based on the old regime, but the individual can still switch regimes when filing their annual income tax return.
Business Income: For individuals having business income, the choice of regime is a bit more rigid. Once they opt for the new tax regime, they can switch back to the old regime only once in their lifetime. After switching back to the old regime, they cannot opt for the new regime again in the future.
Salaried individuals should declare their choice to their employer at the beginning of the financial year. The employer will consider the chosen regime for TDS (Tax Deducted at Source) purposes on salary.
When filing the income tax return (ITR), individuals can choose their preferred tax regime for that financial year, irrespective of what they declared to their employer.
This allows flexibility for taxpayers to evaluate their tax liabilities under both regimes and choose the more beneficial one at the time of filing. Your query for can we change tax regime every year should be solved.
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Can We Change Tax Regime Every Year?
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2024-05-31T16:12:36+00:00 2024-06-28T21:11:54+00:00Comment
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