CBDT issues new form to give details on 'other taxes' paid by employees

Employees have to use Form 12BAA to report to employers any deductions from sources of income other than their salaries

The Central Board of Direct Taxes (CBDT) has introduced Form 12BAA for reporting non-salary income and providing details of tax collected at source (TCS). In line with the provisions of Union Budget 2024, the form will enable people to inform their employers about already deducted tax from non-salary sources.

 

“Employers are required to deduct tax at source from employee salaries under Section 192 of the Income Tax Act, 1961, after considering the tax regime opted by the employee and declaration (deduction, exemption, other income) made by the employee. Previously, employees could report other income and associated tax deductions but couldn’t report TCS and all TDS (tax deducted at source) to the employer. This resulted in higher tax deductions by employers from salary payments and cash flow issues for employees,” said Mitesh Jain, partner, Economic Laws Practice.

 

 

By informing employers about the TCS and TDS using the new form, employees can reduce the tax deducted from their salary. This initiative will assist employees in managing cash flow challenges, thereby increasing their disposable income for spending or saving.

 

How will you benefit from Form 12BAA?

 

Form 12BAA allows employees to inform their employer about TDS made from sources of income other than their salary, such as fixed deposits, insurance commissions, or share dividends.

If the employee has made a large purchase or paid in a foreign currency where TCS was deducted, this can also be reported through Form 12BAA.

 

By providing this information to the employer, the amount of TDS deducted from the salary can be reduced, resulting in higher take-home pay for the employee, allowing for more disposable income to spend or save.

 

What information has to be given in Form 12BAA?

 

In Form 12BAA, employees are required to provide key information related to the deduction of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) from any additional income or expenses they may have.

 

Information to be provided for TDS:

 

The section under which tax was deducted.

 

The name and address of the deductor.

 

The Tax Deduction and Collection Account Number (TAN) of the deductor. 

 

The amount of tax deducted. 

 

The amount of income received or credited. 

 

Any other relevant details.

 

Information to be provided for TCS:

 

The section under which tax was collected. 

 

The name and address of the collector. 

The TAN of the collector. 

 

The amount of tax collected. 

 

Any other pertinent information.

 

“The form has also provided the space for reporting the loss under the head ‘income from house property’. It has provided the amount and the details column for reporting the losses. Further, a verification has to be signed by the employee. Form 12BAA would majorly simplify the Income Tax filing process for the employees and all transactions will be duly recorded under one form,” said Rajarshi Dasgupta, executive director, Tax, AQUILAW.