Basic Strategies to Avoid Higher TDS Under NTR OR OTR Regimes

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(No Transcript)
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New Vs Old Tax iLegimes Most EfFective
Strategies for
Avoiding Higher TDS on Salary
Employers are requesting employees to
provide evidence of their investments during the
year to avoid higher tax deductions from their
salary. Recent changes in income tax laws,
effective from April 1, 2023, require salaried
individuals to be aware of these changes and
determine if they need to submit investment proof
to prevent higher TDS from their salary.
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Employees Need to Submit Investment Ikecords
The necessity to provide investment proof to
avoid increased tax deductions depends on
the chosen tax regime and company policy
regarding tax regime switching. Another factor
is- if it is allowed under the company policy
that you can switch the tax regime- from new to
old or vice versa from what you opted for in
April 2023. Employees usually dont need to
submit any documents for investment proposals in
April, when employers ask. However, the finance
department sends emails requesting proof of
investments, in the last three months of the
financial year.
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Employee Obligation Submission of Investment
fLecords

• Additionally, declarations can save individuals
  from TDS generally till the first 3 quarters of
  the
• FY which is till December, but starting with the
  last cuarter of the FY in January, companies
  require actual proof to support the declaration.
  Deductions from January onwards are based on
• both actual investments and expenses (supported
  by Qroo/ and provisional investments and expenses
  for the remaining part of the last quarter, until
  March 31. The new tax regime has been set as the
  default option, requiring individuals to
  specifically opt for the old tax system. Failure
  to do so will result in salary taxes being
  deducted based on the new tax regime.

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What if a Person Selects the OTiL iLegime?
The old tax regime provides many tax deductions
and exemptions, including house rent allowance
(HRA), leave travel allowance (LTA), and
deductions under Sections 80C, 80D, 80CCD(1b),
80CCD(2), and others. Therefore, if someone
selects the old tax system between January and
March 2024, they must provide investment
documents to prevent higher tax deductions from
their earnings. The type of proof required
depends on the claimed tax exemptions and
deductions.
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What Happens If Someone Chooses the OTiL iLegime?
For instance, to claim HRA exemption for rent
paid during the year, an employee must present
a rent agreement and rent receipts. If thc yearly
paid rent is more than Rs 1 lakh, the landlord's
PAN is mandatory. Likewise, to claim Section 80C
deductions, employees need to provide documents
of declared investments and expenditures. This
includes premium receipts for like insurance
policies, statements from mutual hand houses for
ELSS investments, and the Qassbook of the Public
Provident Fund. Other eligible expenditures under
Section 80C include home loan statements
indicating the principal amount repaid in a year
and See receipts for tuition fees paid for two
children.
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What Occurs When Opting for the OTIL fLegime?
In order to avail of LTA exemption, it is
necessary to possess flight and/or train tickets.
Tax professionals advise salaried individuals to
claim LTA exemption through their employers, as
there is ambiguity in income tax laws regarding
the eligibility of such exemption when filing the
income tax return. Regarding HRA, the tax
exemption can be claimed either through the
employer or by submitting the ITR.
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What Would Happen if a Person Selected NTR Regime?

• Failing to respond to the employer will result in
  TDS on salary being deducted based on the new
• tax regime. INan individual previously opted for
  the old tax system but fails to provide the
  required proof by the employer's specified due
  date, TDS will be deducted according to the old
• tax system. When the employer asks an individual
  to switch from the old tax regime (previously
  opted) to the new tax regime (currently opted),
  there will be no need to submit investment
  documents. Unlike the old tax regime, the new tax
  system only provides two deductions for salaried
  employees the usual deduction of Rs 50,000 and
  Section 80CCD (2) deduction.

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What Would Occur if an Individual Chooses the NTIL
iLegime?
Unlike the old tax regime, the new tax system
only provides two deductions for
salaricd employees the usual deduction of Rs
30,000 and Section 80CCD (2) deduction. The
standard deduction of Rs 30,000 is a direct
deduction applicable to salary and pension
income. No documents must be submitted to the
employer to claim this standard deduction.
Starting from FY 2023-24, the employer
automatically considers the standard deduction
from salary income while calculating the taxes to
be deducted under the new tax regime. The
standard deduction is also available under the
old tax regime.
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What Happens if an Individual Chooses the NTR
Regime?
Section 80CCD (2) applies to the employer's
contribution to the employee's NPS Tier-I
account. In this case, the employer deposits
money into the employee's NPS account, so
additional documents as investment proof are
usually not required by the employer. No other
deductions are provided to salaried individuals
as per the new tax regime. To come under the
criteria for higher deductions and exemptions
beyond the standard deduction and 80CCD(2),
certain conditions must be met.
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Deadline for Submitting an Investment iLecord as
Valid

• The deadline for submitting investment proof
  varies, but most organizations expect the
  evidence
• to be submitted by March IS. If the submitted
  documents are not as per the selected tax regime,
  the employer will deduct a higher TDS on salary
  incomc until the actual documcnts or investment
  declaration is furnished.
• None of the essential investment documents need
  to be submitted to the income tax department when
  ITR filing. Companies are responsible for
  deducting accordingly as they are receiving these
  documents.

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Deadline for Submitting Investment iLecords as
Valid
Old tax regimes require individuals to pay tax
based on the tax slab to which they fall, whereas
new tax regimes have lower tax rates but no
exemptions. Choosing the right tax regime will
help you save more on your taxes and suit your
financial situation. Section 80C of the Income
Tax Act, 1961 allows you to make tax-saving
investments to avoid higher income taxes. You can
easily compare your new and old tax regimes,
import and export data, and create tax challans
with SAG Infotech Gen Income To Software.
Additionally, ensure that all the tax deductions
made by your employer are by Income Tax
regulations by keeping a record of them. Then,
you wont have to pay higher income taxes and you
will be able to save some money as well.
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Deadline for Submitting an Investment iLecord as
Valid
Old tax regimes require individuals to pay tax
based on the tax slab to which they fall, whereas
new tax regimes have lower tax rates but no
exemptions. Choosing the right tax regime will
help you save more on your taxes and suit your
financial situation. Section 80C of the Income
Tax Act, 1961 allows you to make tax-saving
investments to avoid higher income taxes. You can
easily compare your new and old tax regimes,
import and export data, and create tax challans
with SAG Infotech Gen Income To Software.
Additionally, ensure that all the tax deductions
made by your employer are by Income Tax
regulations by keeping a record of them. Then,
you wont have to pay higher income taxes and you
will be able to save some money as well.
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iLecent Amendments in I-T from 1st April 2023
From April 1, 2023, there have been several
changes in income tw regulations to make the new
tax regime more appealing than the old tax
regime. The amendments include
Reducing the income tax slabs from six to five,
Increasing the basic exemption limit from Rs 2.5
lakh to Rs 3 lakh (an increase of Rs 50,000),
Raising the income tax rebate, which means zero
tax is payable under the new tax regime iL the
taxable income does not exceed Rs 7 lakh in a
financial year,
Introducing a standard deduction of Rs 50,000
from salary income under the new tax regime,
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Latest Changes in Income Tax Regulations Since
April 1, 2023
Making the new tax regime the default option
unless the taxpayer specifically chooses the old
regime.
T Reducing the highest surcharge rate from 37 to
25, benefiting individuals earning more than Rs
S crore annually, who were previously obligated
to pay a surcharge of 37 regardless of the tax
regime,
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Income Department's View on TDS on Salary
TDS on salary income is governed by Section 192
of the Income-tax Act, which means employers
are responsible for deducting and depositing
taxes before carrying out the salary
/ay1nents. Based on the modifications in the
Income-tax Act, the Central Board of Direct Taxes
(CBDT) issued a circular on April 5, 2023,
providing guidelines of companies should deduct
TDS on salaries for the ongoing financial
year. Nevertheless, the notification docs not
mention whether an employee can switch tax
regimes during the financial year. According to
tax experts, the possibility of changing the two
tax regimes relies on the company's policy.
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What If the Deducted Tax Lrom Salary Exceeds?
If the investment declaration or documents are
not submitted by the initial deadline, the
employer will deduct excess TDS when paying the
salary. In such cases, any excess tax deducted
will be reflected in Form 16. The individual will
then need to claim an income tax refund while ITR
filing to recover the excess amount.


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