Have you opted for the new tax regime only to realize later that the old tax system would have been more beneficial? Don’t worry, you can still make the switch. Here’s how:
1. Understanding Changes in Tax Slab Rates for FY 2023-24:
In the budget for the financial year 2023-24, Union Finance Minister Nirmala Sitharaman announced significant changes in income tax slab rates.
Under the new tax system, income up to Rs 3 lakh is now tax-free.
The tax-free threshold for income has been increased from Rs 5 lakh to Rs 7 lakh.
Tax rebate limit has also been raised from Rs 5 lakh to Rs 7 lakh.
2. Default Tax Regime Transition:
As of April 1, 2023, the default tax regime has become the new tax regime.
Employers or companies will deduct tax (TDS) on salaries based on the new tax regime, irrespective of whether the taxpayer has chosen the old tax regime.
3. Flexibility in Changing Tax Regime:
The Central Board of Direct Taxes (CBDT) has not provided clear guidelines regarding changing tax regimes during the financial year, as per its April 2023 circular.
However, tax experts suggest that employees may be able to change tax regimes based on their company’s policy.
If the company does not offer an option to switch tax regimes, there is still a solution.
4. Changing Tax Regime While Filing ITR:
According to tax experts, taxpayers have the option to choose their preferred tax regime while filing Income Tax Returns (ITR).
If you initially opted for the new tax regime but now wish to switch to the old tax system, you can do so while filing your return.
The income tax law allows flexibility in choosing between the old and new tax regimes during the ITR filing process.