Union Budget 2024: The Central Board of Direct Taxes (CBDT) has introduced a new form known as Form 12BAA, specifically created for the disclosure of non-salary income and inclusion of details on Tax Collected at Source (TCS). These forms, in accordance with the guidelines outlined in the Union Budget 2024, will facilitate the offsetting of Tax Deducted at Source (TDS) and TCS collected from sources other than salary against the TDS on salary.
The Form 12BAA is the statement showing particulars for the purposes of sub-section (2B) of section 192. Employees are required to use the newly introduced Form 12BAA to inform their employers about the deductions made from income derived from sources other than their salaries. These sources may include earnings from fixed deposits, commissions from insurance policies, dividends from investments in equity shares, or taxes collected during the purchase of goods or services, such as a car or foreign currency.
What is Form 12BAA?
The new Form 12BAA will include reportage of non-salary income along with details on Tax Collected at Source (TCS). This was not present in the older version of the form. The new form is simple and would require employees report their Tax Deducted at Source (TDS) and TCS collected from sources. This will be an additional intimation to the employer. The employees will have to file Form 12BA along with the new Form 12BAA.
How would Form 12BAA help employees?
Employers traditionally deduct TDS from salaries based on the employee’s declaration, considering investments and eligible expenses for tax deductions. However, they have not previously accounted for taxes paid by the employee from other sources. This is set to change with the introduction of a new form by the CBDT.
By using this form to report TCS collections and TDS deductions, employees can reduce their tax deductions at the source, thereby easing cash flow issues and potentially increasing their disposable income. The CBDT officially announced the new form through a notification on October 15, 2024.
This new requirement for employees to disclose other TDS and TCS information to their employers came into effect on October 1, 2024. Employees can now inform their employers about TDS deducted from additional income sources or TCS collected when making significant expenditures.
However, the notification did not specify a particular method for employees to communicate this information to their employers.
Structure of Form 12BAA
The new Form 12BAA would require TDS details of:
> Section under which tax was deducted
> Name of the deductor
> Address of the deductor
> TAN of the deductor
> Amount of tax deducted
> Amount of received/credited
> Other details
TCS details:
> Section under which tax was deducted
> Name of the collector
> Address of the collector
> TAN of the collector
> Amount of tax collected
> Other details
Source: Taxscan.in
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Budget 2024 on TCS and TDS
The 2024 Budget introduced initiatives to streamline the credit claiming process for TCS (tax collected at source) and TDS (tax deducted at source) for salaried individuals.
During the Budget presentation, FM Nirmala Sitharaman said: “Representations have been received that credit of TCS paid should be allowed while computing the amount of tax to be deducted on salary income of the employees as this will help in avoiding cash flow issues for employees. Similarly, all TDS may be taken into account for the purpose of deduction of tax from the salary income of employees. Moreover when the TCS etc is not taken into account, the same is required to be claimed as a refund by the employee which adds to the compliance process. In order to ease compliance, it is proposed that sub-section (2B) of section 192 may be amended to expand the scope of the said sub-section to include any tax deducted or collected under the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, to be taken into account for the purposes of making the deduction under sub-section (1) of section 192.”
What is Form 12BA?
The employer issues Form 12BA to employees whose salary exceeds Rs 1,50,000, detailing the perquisites provided. These perquisites may include rent-free accommodation, contributions to superannuation funds, traveling expenses, and other benefits. Form 12BA should only be issued if the employee’s salary exceeds Rs 1,50,000. If the salary is below this threshold, the details of perquisites already included in ‘Part B’ of Form 16 will suffice, and there is no need for a separate statement in the form of Form 12BA.
