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June 6, 2020

Format of Declaration to be taken from Salaried Employee by Employer to deduct TDS in Old or New IT Slab Rates

by Mahesh Mara in Income Tax

Format of Declaration to be taken from Salaried Employee by Employer to deduct TDS in Old or New IT Slab Rates

The Finance Act 2020, has introduced new section 115BAC, as per this provision the assessee has an option whether to pay tax as per new slab rates or the old slab rates including employees for Financial Year 2020-21 Assessment Year 2021-22. Where the employee opts for new tax regime then the employee has to forgo some of the tax concessions under the existing income tax act, whereas if the employee opts for old tax regime then he will get the benefits of deduction under the income tax act.

The provision is made applicable for the Individual/ HUF and the individual can exercise the option at the time of filing the return of income. If the individual assessee is a salaried employee then he opt the scheme on a yearly basis. It means the individual can switch to the tax regime of his choice in the next year.

For opting the scheme, the employee has to give declaration to the deductor of his intention to opt for old or new tax scheme as per his choice. Upon such intimation, the employer shall compute his total income and make TDS thereon in accordance with the provision of section 115BAC of the Act. The declaration made by the employee cannot be changed. However at the time of filing Returns he can again chose one more time. Also Next year he can chose again if employee wish to switch method

Employers are confused with the format and mode of declaration

The Format of declaration is simple form which is given below. You can also download the word file and take declaration in physical form. Due to Covid19 and Lockdown many employees are working from Home or it is difficult to take physical signed copy of declaration. In such cases the declaration can be taken online from employee on his email address. The format use can be same. Remember to receive email from the email id usually used by employees. Also preserve the same, as once the declaration of Old or New rates of Income Tax for FY 2020-21 AY 2021-22 is made the employee cannot change during the year, or request employer to change before 31 March 2021

If employee are confused which rate to chose then read the below mention article on section 115BAC which will help you to decide which rate to go for in FY 2020-21

Which Slab Rate to Choose FY 2020-21 Old or New? Know Opt in Opt out rules for salaried & business, deduction not allowed section 115BAC

Format of declaration u/s 115BAC:

From,                                                   

___________________________________

(Name and address of Employee)

To,

HR Payroll

____________________(Company Name)

Address of Company

Subject: Declaration u/s 115BAC for opting old tax regime/ new tax regime under Income Tax Act for computation of TDS on salary

Dear HR Pay roll,

I ___________________(Name of employee) hereby declare that I want to opt for _________________(old tax regime/ new tax regime) under Income tax act for computation of TDS on salary. I also know that if I opt for new tax regime than I will have to forgo all the deduction under the Income tax act and pay taxes as per the new slab rates notified by the Finance Act 2020. Whereas if I opt for old tax regime than I will have get benefit of all the deduction under the Income tax act and pay taxes as per the old slab rates notified by the Finance Act 2020.

Please consider this declaration and calculate and deduct the TDS.

Yours sincerely,

__________________(Name of employee)

___________________

(Signature)

Know Opt in Opt out Rules for New Slab Rates FY 2020-21 for Salaried & Business

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