Introduction
If you are a salaried employee, choosing the correct tax regime and informing your HR on time is very important. A delay in declaring your tax regime can directly impact your monthly salary due to higher TDS (Tax Deducted at Source).
What Happens When You Don’t Inform HR on Time?
When you fail to declare your tax regime (old or new) within the deadline set by your employer:
- HR usually defaults to the new tax regime or higher tax slab assumptions
- Fewer or no deductions are considered
- As a result, more tax is deducted from your salary every month
This leads to reduced in-hand salary.
Why Does Higher TDS Get Deducted?
Under the rules of the Income Tax Act, 1961, employers are required to deduct tax based on:
- Declared investment proofs
- Chosen tax regime
- Estimated annual income
If details are not provided, employers take a conservative approach and deduct higher tax to avoid penalties.
Can You Fix It Later?
Yes, but with some limitations:
1. At Year-End Adjustment
- You can file your Income Tax Return (ITR)
- Excess TDS deducted may be refunded
2. During Payroll Correction (If Allowed)
- Some companies allow mid-year updates
- But this depends on HR policy
Impact of Late Declaration
Short-Term Impact:
- Lower monthly salary
- Higher monthly TDS deduction
Long-Term Impact:
- Refund after ITR filing (if excess tax was deducted)
- Temporary cash flow issue
How to Avoid This Mistake
1. Declare Early
Submit your tax regime choice at the start of the financial year.
2. Submit Investment Proofs on Time
Include:
- 80C investments
- Insurance premiums
- Home loan details
3. Re-check Salary Slips
Ensure correct TDS is being deducted monthly.
Old vs New Tax Regime Reminder
- Old Regime: Allows deductions and exemptions
- New Regime: Lower tax rates but fewer deductions
Choosing wisely affects your take-home salary significantly.
Conclusion
Delaying your tax regime declaration to HR can result in higher monthly TDS deductions, reducing your take-home salary. While refunds are possible later through filing under the Income Tax Act, 1961, it is always better to declare on time to avoid unnecessary financial stress.
👉 Simple rule: Plan early, declare on time, and avoid salary surprises.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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