CBDT clarifies Employer’s TDS obligation under New ‘default’ Tax Regime us 115BAC

CBDT vide Circular No. 4/2023 dated 5th April, 2023 has issued clarifications regarding employer’s liability w.r.t. TDS on salary in the light of new default personal tax regime introduced by the Finance Act, 2023 u/s 115BAC(1A). CBDT has issued the following directions /clarifications in the said circular:

  • That an employer, shall seek information from each of its employees having income u/s 192 regarding their intended tax regime and each such employee shall intimate the same to his employer for each year and upon intimation, the employer shall compute the employee’s total income and deduct tax at source according to the option exercised.
  • That in the absence of intimation by the employee, it shall be presumed that the employee continues to be in the default tax regime (i.e. New Tax Regime) and has not exercised the option to opt out of the new tax regime. Accordingly, in such a case, the employer shall deduct tax at source, on income under section 192 in accordance with the rates provided under 115BAC(1A).
  • That employee’s intimation would not amount to exercising option in terms of Section 115BAC(6) and the person shall be required to do so separately in accordance Section 115BAC(6).

This Circular is applicable for TDS during FY 2023-24 and subsequent years.

For details, please refer CBDT Circular No. 4/2023 dated 5th April, 2023


PDF version is attached:  https://www.dpncindia.com/blog/wp-content/uploads/2023/04/New-Tax-Regime-Employers-TDS-obligation-under-New-default-Tax-Regime-under-section-115BAC-CBDT-Clarifications.pdf

DISCLAIMER: – The summary information herein has been compiled by our expert team of tax consultants based on CBDT Circular No. 4/2023 dated 5th April, 2023. While the information is believed to be accurate, we make no representations or warranties, express or implied, as to the accuracy or completeness of it. Readers should conduct and rely upon their own examination and analysis and are advised to seek their own professional advice. This note is not an offer, advice or solicitation. We accept no responsibility for any errors it may contain, whether caused by negligence or otherwise or for any loss, howsoever caused or sustained, by the person who relies upon it.

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