The new tax regime will be the default regime as per the Finance Act, 2023, from FY 2023-24. Vide Circular No. 4/2023 dated 05.04.2023, clarification is issued by CBDT for employer’s TDS liability on salary/pension.
In addition to declaration regarding deduction, exemption, previous employer salary, other income from employee; now employer will take declaration from each of its employees regarding their intended tax regime for each year.
As per declaration, the employer shall compute the employee’s total income and deduct tax at source according to the option exercised and deduction/exemption, etc.
Further, in the absence of intimation by the employee, it shall be presumed that the employee continues to be in the default new tax regime. However, the person shall be required to exercise the option separately at the time of filing ITR in accordance with the law.