Intimation to employers for opting Old Regime of Taxation

The Central Board of Direct Taxes (CBDT) vide Circular No. 04 of 2023 dated 05.04.2023 has provided
clarifications for the employers deducting TDS on salary with respect to the choice between old and new regime of taxation. Such clarifications are discussed below:

• The Finance Bill 2023 made the new regime of taxation, the default tax regime for the individual taxpayers.
• However, the taxpayer has an option to opt out of this new tax regime. A person not having income from business or profession can exercise such option to opt out of new regime every year. All other taxpayers can opt out of the new tax regime only once.
• The employers shall seek information from each of their employees regarding their choice of tax regime and upon receipt of intimation, the employer can withhold taxes accordingly. In the absence of any intimation, taxes shall be withheld as per the new tax regime (being the default tax regime).
• The intimation furnished by the employees shall not be deemed as exercise of option to opt out of new regime and the employees will have an option to choose between old regime and new regime at the time of filing of return of income.

Lakshay Prakash Jonwal, Direct Tax Associate, SW India