The Central Board of Direct Taxes has released a new form. It will help in deducting TDS from salary. 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.
Budget 2024 has talked about adjusting TDS and TCS from other sources against salary TDS. The Central Board of Direct Taxes (CBDT) has issued a new form regarding this. According to the Economic Times, this information has been given through a notification issued by the CBDT on October 15. 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. Such as, information about fixed deposits, insurance commission, dividend from equity shares or tax deducted in buying a car or foreign currency is included.
How will it help?
Firms usually deduct TDS from salaries as per the declaration of the employees, taking into account the investments and expenses for tax deduction. However, firms did not adjust the tax paid by the employee from other sources. Now, this will change with the new form issued by CBDT.
What will be the benefit?
Through this new form, the employee can reduce the tax deduction from his 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. The employee can inform his firm about the 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 firm. Now the new form issued by the department will help the employee to give this information to the firm.
What is the difference between TDS and TCS?
TDS and TCS are two ways of collecting tax. If a person has earned more than a certain limit, then a certain amount is deducted from that income. This amount deducted as tax is called TDS. TCS is the tax that the seller collects from the buyer. In both these cases, there is a need to file a return.