New Income Tax Form: No TDS will be deducted from salary

Form 12BAA Launched: Finance Minister Nirmala Sitharaman had announced in the budget for the financial year 2024-25 that Tax Deducted at Source (TDS) deducted from salary will be adjusted against TDS and Tax Collected at Source (TCS) from other sources.

Finance Minister Nirmala Sitharaman announced in the budget for the financial year 2024-25 that Tax Deducted at Source (TDS) from salary will be adjusted against TDS and Tax Collected at Source (TCS) from other sources. Now, the Central Board of Direct Taxes (CBDT) has launched a new form for this. This form is called Form 12BAA. This form will be used by employees to inform their employers about the tax deductions made from other sources apart from their salary. This will include information about fixed deposits, insurance commissions, dividends received from equity shares, and tax deducted on car or foreign currency purchases.

Rules Changed

Companies usually deduct TDS from employees’ salaries based on their declarations, taking into account investments and expenses. However, employers did not adjust the tax deducted from other sources on behalf of the employees. Now, with the launch of the 12BAA form by the CBDT, this will change.

Beneficial For Employees

Through this new form, employees can provide information about TCS deposited and TDS deducted from other sources, thereby reducing the tax deduction from their salary. This step will help employees tackle cash flow problems and make better use of their income.

New Law Requirement

The new law requiring employers to be informed about TDS and TCS deducted from other sources has come into effect from October 1 this year. Employees can now inform their employers about TDS or TCS deducted from other income sources or big expenses. Earlier, there was no mechanism for employers to receive such information. Now, the new form launched by the department will help employees provide this information to their employers.