The Central Board of Direct Taxes (CBDT) has notified certain changes in income tax rules to simplify the process of claiming credit for TCS collected/TDS deducted for salaried employees.
Introduced under the sub-section (2B) of Section 192 of the Income-tax Act, 1961, the amendment is made vide the Finance (No. 2) Act, 2024 (FA (No. 2)) to include any tax deducted or collected at source under the provisions of Chapter XVII-B or Chapter XVII-BB, whichever is applicable, for the purpose of making tax deductions for salaried employees.
Additionally, the Income-tax Rules, 1962 (‘the Rules’) have been amended to introduce Form No. 12BAA to provide the details required under sub-section (2B) of Section 192 of the Act.
Employees must submit these details to their employers, who will then make payments under sub-section (1) of Section 192. The employer will deduct TDS on salary after taking into account the furnished particulars.
The usual practice till now was for employers to deduct TDS from salary based on the declaration given by the employee, taking into consideration investments and expenditures that qualify for tax deductions. The taxes paid by employees against other sources were not adjusted.
With this amendment, however, employers will be informed about the TCS and TDS details via Form 12BAA, and the employees will be able to reduce their tax deductions from their salaries.
