New Income Tax Form Released: Lower TDS Deductions From Salary – Find Out How

The Central Board of Direct Taxes ( CBDT ) has introduced a new form, Form 12BAA , aimed at helping salaried employees reduce the Tax Deducted at Source (TDS) from their salary. This form allows employees to report TDS deducted from other sources of income and Tax Collected at Source (TCS), enabling employers to make appropriate tax adjustments. This move is designed to ease cash flow issues for employees by reducing the amount of TDS deducted from their salary, giving them more take-home pay.

How Does Form 12BAA Benefit Employees ?

By filling out Form 12BAA, employees can notify their employers about TDS deductions on income from sources other than their salary, such as:

• Fixed Deposits (FDs)
• Insurance commissions
• Share dividends

Additionally, if an employee has made a large purchase (like a car) or paid in foreign currency, and TCS was deducted, this can also be reported in the form. Once this information is shared with the employer, the TDS from salary can be reduced, thereby increasing the employee's income, leaving more money for saving or spending.

Information Required in Form 12BAA

Employees will need to provide the following details related to TDS and TCS deductions from other sources of income or expenses:

TDS Information:

• The section under which TDS was deducted
• Name and address of the person deducting TDS
• TAN number of the person deducting TDS
• Amount of tax deducted under TDS
• Total income on which TDS was deducted
• Any additional relevant information

TCS Information:

• The section under which TCS was collected
• Name and address of the person collecting TCS
• TAN number of the person collecting TCS
• Total amount of TCS deducted
• Any additional relevant information

Employees can also provide information about any losses from house property in this form. After completing the form, the employee must verify, sign, and submit it to their employer for adjustments.

Who Can Benefit from Form 12BAA?

Form 12BAA is particularly beneficial for employees who have TDS or TCS deductions from sources other than their salary, such as income from fixed deposits, shares, or large purchases. Employees who want to reduce TDS on their salary and increase their take-home pay can take advantage of this form. Additionally, employees who have suffered losses from house property can use the form to report this and potentially lower their tax liability.

New Rules for TDS Deduction from Salary

Under the new rules, employees can use Form 12BAA to inform their employers about TDS and TCS deductions from other sources. Employers will then adjust the TDS deducted from the employee’s salary accordingly. These new rules came into effect on October 1, 2024.

How Is Form 12BAA Different from Form 12BB?

Both Form 12BAA and Form 12BB are tax declaration forms. However, Form 12BAA allows employees to report TDS and TCS deductions from sources other than salary. This means less tax will be deducted from the employee's salary, resulting in a higher take-home pay. Employers will now use the information in Form 12BAA to adjust TDS on salaries.

The introduction of Form 12BAA is a relief for salaried employees who previously had to wait for refunds on TDS and TCS amounts deducted from non-salary sources.

Budget Announcement and TDS/TCS Adjustments

In the Union Budget, the government announced the plan to adjust TDS and TCS from other sources in the TDS deduction from salaries. The primary goal is to reduce cash flow issues for employees. This adjustment simplifies the tax process and removes the need for employees to claim refunds on TDS/TCS, making tax compliance easier and faster.