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TDS New Rule: If you belong to the salaried class and your TDS is deducted every month, then this news is useful for you. Yes, CBDT has issued a new Form 12BAA to implement the announcement made by Finance Minister Nirmala Sitharaman in the Budget 2024 presented in July. In this it was said that TDS and TCS deducted from salary will be adjusted. This form will be used by employees to inform employers about tax deductions from sources other than their salaries. Under this, information about FD, insurance commission, dividend from equity shares and purchase of car etc. can be given.
Tax deduction can be reduced from salary
Employers usually deduct TDS from the salary based on the declaration of investments made by the employee. Investments and expenses are taken into account for tax deduction. But employers did not set off taxes paid by the employee for other things. But now it will be necessary for the employer to see how much tax the employee has paid at other places, accordingly TDS can be deducted from the employee's salary. Through the new form, the employee can reduce the tax deduction from his salary by giving information about TCS and TDS deduction to his employer. With this, the employee will have more money to spend and their saving habit will increase. CBDT has issued a new form by issuing a notification on 15 October.
The new rule came into effect from 1 October 2024
The law related to giving information to the employer about TDS deduction in TCS and other items has come into force from October 1, 2024. Now the employee can give information to his employer about the TDS deducted from other income sources. After the release of the new form related to TDS, tax expert Ashish Mishra says that after its implementation, if an employee wants to reduce the tax deducted from the salary and increase the take-home, then he can do so through Form 12BAA. You can inform your employer about the tax deducted from other income sources. The new Form 12BAA is similar to Form 12BB, which is used by the employee to make investment declaration to the employer.
As per income tax rules, the employer has to deduct tax from the salary paid to the employee under section 192 of the Income Tax Act. Tax will be deducted based on the tax regime chosen by the employee. The employee is free to choose either the old or the new tax regime. Under the old tax system, any person could claim tax exemption under sections 80C, 80D, HRA, Leave Travel Allowance (LTA), etc. Additionally, the new tax regime allows standard deduction to reduce TDS from salary and contribution to NPS account.
