This yr, other than the traditional funding declarations, workers are being requested to declare the tax regime they’ll go for.

Listed here are a number of the factors it’s best to take note whereas making the funding declaration.

Altering the tax regime later might not be a good suggestion: Tax laws permit particular person taxpayers to decide on between the 2 tax regimes on a yearly foundation. The taxpayer may even change the tax regime on the time of submitting of revenue tax return (ITR).

The brand new tax regime provides decrease tax slab charges. Subsequently, if you happen to go for the brand new tax regime, your tax legal responsibility could also be decrease and therefore the employer could deduct decrease TDS, however keep in mind that it’ll solely be useful in case you are not claiming any deductions and exemption out there beneath the previous regime.

“Those that wish to reap the benefits of decrease tax slabs and having revenue beneath ₹15 lakh will get decrease TDS thus larger take dwelling. Nevertheless, he or she should be aware that a lot of the deduction and exemption aren’t out there beneath the brand new regime. In case they’re already dedicated for a number of bills like lease (deduction may be claimed beneath home lease allowance), medical insurance coverage, tuition price, dwelling mortgage compensation and curiosity and so forth than examine the web tax payable in each tax regimes earlier than deciding. To make sure, take tax specialists recommendation – save for positive than sorry,” stated Sudhir Kaushik, CEO Taxspanner.com.

It might lead to further legal responsibility and altering the tax regime could improve the probabilities of error.

“It’s typically advisable to comply with the identical regime, each for paying advance tax/ TDS in addition to at time of submitting the ITR. That is for a easy motive that following a unique regime could lead to an pointless tax payable/ refundable state of affairs in ITR. If it’s a tax payable state of affairs, it will appeal to further curiosity legal responsibility to be paid by taxpayers. If it is a tax refundable state of affairs, the taxpayer’s cash is unnecessarily locked till refund is granted by revenue tax authorities,” stated Shailesh Kumar, Companion, Nangia & Co LLP.

It’s at all times higher to resolve upfront: It’s at all times higher to do the maths now and resolve the tax regime as this will likely allow you to plan your investments correctly. When you plan to change to the previous regime from new regime you’ll have to make tax-savings funding on the finish which can improve burden in the previous few months.

“I really feel that taxpayers now have extra choices. If a taxpayer doesn’t wish to spend money on tax saving investments , then one can go for a brand new tax regime. If any individual desires to do full scale tax planning together with wealth creation, one has the choice to go for the previous tax regime,” stated Sujit Bangar, Founder Taxbuddy.com