In line with the Budget 2024 announcement about adjusting TDS and TCS from other sources against salary TDS, the Central Board of Direct Taxes (CBDT) has introduced a new form called Form 12BAA.
This form will be used by employees to report tax deductions from income sources other than their salaries, such as fixed deposits, insurance commissions, dividends from stocks, or tax collected during purchases, like buying a car or foreign currency.
Form 12BAA is specifically designed for employees to disclose their non-salary income and details about Tax Collected at Source (TCS). According to the Union Budget 2024 guidelines, this form will allow employees to offset TDS and TCS collected from other income sources against the TDS on their salaries.
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What is Form 12BAA?
Form 12BAA is a new statement that includes information about non-salary income and TCS details, which were not included in the previous version. This form is straightforward, requiring employees to report their TDS and TCS from other sources. It serves as an additional notice to employers. Employees will need to submit Form 12BA along with Form 12BAA.
How does Form 12BAA benefit employees?
Traditionally, employers deduct TDS from salaries based on the declarations made by employees, which consider investments and eligible expenses. However, they have not previously accounted for taxes paid from other income sources. The new form changes this.
By using Form 12BAA to report TCS and TDS deductions, employees can reduce their tax deductions at the source. This can help improve cash flow and potentially increase their disposable income. The CBDT officially announced this new form on October 15, 2024.
Employees must disclose other TDS and TCS information to their employers starting from October 1, 2024. They can now inform their employers about TDS deducted from additional income sources or TCS collected during significant purchases.