Income Tax News: Insightful! Accidentally Opted for the New Tax Regime? Check out ITR Implications

Income Tax News: During this time, proof of tax-saving investments is typically requested from salaried staff. It is important to ascertain why your company did not request an investment declaration from you this year.

New Tax Regime Takes Center Stage

For salaried taxpayers, the new tax Regime is now the default option according to this year's Budget 2023. According to an ET report, you will now be subject to taxation under the new regime if you haven't informed your employer of your preference.

Higher Thresholds for Tax Relief

With the new tax regime, there are wider tax slabs, lower tax rates, and a higher threshold for tax relief. Under this system, you won't pay any tax if your taxable income is less than Rs 7 lakh. When this is combined with the Rs 50,000 standard deduction that was reinstated this year, people who have taxable income up to Rs 7.5 lakh will not be required to pay any taxes. Furthermore, investing your money in tax-saving vehicles is not necessary.

Home and School Loan Impact

To choose this regime, however, is to give up a number of exemptions and deductions that were available under the previous tax system, including the LTA, HRA, and deductions for medical insurance, home and school loan interest, and tax-saving investments. The CEO of the online tax filing portal Taxspanner.com, Sudhir Kaushik, emphasises that taxpayers must determine if they should choose the new regime or stick with the previous one.

Duration Consistency After Employer Tax Deductions

It stays the same for the duration of the fiscal year after your employer has deducted tax in accordance with the selected regime. There is recourse available during tax filing for those who were unintentionally placed under the new regime. Taxpayers who file their returns under the old regime have the option to switch to the old one and claim any overlooked deductions, which could result in a refund if too much tax was withheld. Certain exemptions, though, aren't refundable when filing taxes. For example, leave travel allowance exemptions cannot be claimed, but HRA exemptions can.

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