Investment declaration: Now calculate your investment and tax and then choose tax system for yourself.
This is the first month of the financial year 2021-22. If you do a job, the employer asks for information related to your investment. Apart from this, you have to choose one in the new and old tax system. On getting the answer to both these things, the employer will deduct the TDS from salary, calculating your tax liability. In such a situation, it is important to know some things.
First of all, the employer would like to know from you which tax system you want to choose in the new and old. If you have invested then the old tax system is better for you. If you have not invested, then the new tax system is better because it has lower tax rate. It is worth noting here that taxpayers can make changes in the tax system for themselves at the time of return filing. If you have chosen the old tax system in the beginning and want to change it at the time of return, then it is possible. Similarly, in the beginning you had chosen the new tax system and if you want to adopt the old tax system while filing the return, then it is also possible.
CMA Rajesh Kumar Jha says that taxpayers should first decide which tax system they want to choose. This will not cause unnecessary problems. Changing the tax regime will either increase or decrease the liability to the tax department. If you have to pay more tax, then penalty will also be imposed. If the tax department will refund you tax then it takes time. In such a situation, your earnings remain unnecessarily with the tax department for a long time.
If you select the old tax regime then deduction can be availed on expenses in medical insurance, tuition fees, home loan repayment, rent payment, life insurance. Apart from this, you will also get the benefit of standard deduction of 50 thousand. If the new tax regime is opted for, then you will not get the benefit of many exemptions including HRA, LTA, standard deduction.