The income tax department on Monday said employees will have to inform their employers about their intention to opt for the new optional tax regime to enable the latter to deduct TDS while paying salaries.
The new income tax regime, announced in Budget, provide an option to individuals and Hindu Undivided Families (HUFs) to be taxed atlower rates if they do not avail specified exemptions and deductions, like house rent allowance (HRA), interest on home loan, investments made under Section 80C, 80D and 80CCD. Under this, total income up to Rs 2.5 lakh will be tax exempt.
A 5 per cent tax will be levied on total income 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.