The Central Board of Direct Taxes (CBDT) has introduced important amendments to the Income Tax Rules, 1962, aimed at simplifying the process for claiming Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) credits. These changes specifically benefit salaried individuals providing greater ease in tax compliance. The key updates are as follows:
1) Introduction of Form No. 12BAA for Salaried Employees:
In Budget 2024, a proposal was introduced allowing taxpayers to provide details on income other than their salary to their employer along with Tax Collected at Source (TCS) and Tax Deducted at Source (TDS). This would be done through a New form, “Form 12BAA”, which enhances the disclosure of various income sources and the taxes deducted/collected on them. Employees can report taxes deducted on income from sources like fixed deposits, insurance commissions, dividends, and taxes collected on significant purchases.
Form 12BAA applies to salaried employees with additional income sources, such as interest, commissions, dividends, or taxes deducted during major transactions (e.g., car purchases). By submitting these details, employees will enable their employers to adjust TDS deductions more accurately, leading to a more precise calculation of their overall tax liability.
The key benefit of this proposal is that it ensures the correct accounting of any TDS/TCS already paid, preventing over or under deduction of taxes. This process not only helps employees by potentially increasing their take-home pay but also makes the tax deduction process smoother and more efficient for both.
