Form 12BAA Launched: Finance Minister Nirmala Sitharaman had announced in the General Budget for the financial year 2024-25 to adjust TDS and Tax Collected at Source (TCS) from other sources against the Tax Deducted at Source (TDS) deduction from salary.
Now the Central Board of Direct Taxes (CBDT) has issued a new form regarding this. It is called Form 12BAA. This form will be used by employees to inform their firm about tax deductions made from sources other than their salary. This includes income from fixed deposits, insurance commission, dividend from equity shares or information about tax deducted in purchasing a car or foreign currency etc.
This will help
Companies usually deduct TDS from salary as per the declaration of the employees, which takes into account the investments and expenses for tax deduction. However, employers did not adjust the tax paid by the employee from other sources. Now this will change with the 12 BAA Form issued by CBDT.
This will be beneficial
Through this new form, employees can reduce tax deduction from their salary by providing information about TCS deposits and TDS deducted from other sources. This move will help employees deal with cash flow problems and spend or save their income.
What changed?
The new law to inform the firm about TDS and TCS deducted from other sources has come into force from October 1 this year. Employees can inform their firm about TDS deducted from other income sources or TCS deducted while making any big expenditure. Earlier there was no specific mechanism to give this information to the employers. Now the new form issued by the department will help the employee to give this information to the employer.
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