A 5 per cent tax shall be levied on complete earnings between Rs 2.5 lakh and Rs 5 lakh, 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh, 25 per cent on Rs 12.5 lakh to Rs 15 lakh, and 30 per cent on above Rs 15 lakh.
In a round, the Central Board of Direct Taxes (CBDT) stated an worker intending to opt for concessional charges of earnings tax as offered within the Budget 2020 could intimate the deductor or his employer of such intention. “The deductor shall compute his total income and make TDS (tax deducted at source) thereon in accordance with the provision of Section 115 BAC of the (Income Tax) Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of Section 115 BAC of the Act,” it stated.
The CBDT has, nonetheless, stated that the worker can change the choice of tax construction on the time of submitting earnings tax return and the quantity of TDS fee will get adjusted accordingly.
Nangia Andersen Consulting Director Shailesh Kumar stated there was no readability to the employers, whether or not they should deduct TDS beneath the new possibility or should proceed deducting TDS beneath the outdated regime, since there was no corresponding change within the TDS provisions enabling them to deduct TDS beneath the new possibility.
This round will take away the confusion amongst employers and also will guarantee there are a minimal mismatch within the TDS and ITR (earnings tax return) of workers in the event that they undertake a constant place whereas making a declaration to the employer in addition to of their ITR, concerning possibility (new or outdated) opted by them.
AKM Global Partner Amit Maheshwari stated, “Now, it’s clear that the employee (only those not having income from business or profession) cannot change the option once exercised for the purpose of getting TDS deducted but can always change it at the time of filing the tax return.”
Under the outdated tax system, earnings up to Rs 2.5 lakh is exempt from private earnings tax. Income between Rs?2.5 lakh and Rs 5 lakh attracts 5 per cent tax, whereas that between Rs 5 lakh and Rs 10 lakh is levied with 20 per cent tax. Income above Rs?10 lakh is taxed at 30 per cent.