The Income Tax Department has made it easier for salaried taxpayers to claim Tax Collected at Source (TCS) and Tax Deducted at Source (TDS) credits.
The Central Board of Direct Taxes (CBDT) has changed the Income Tax rules to allow parents to claim TCS credit for their minor children as well.
Introduction of Form 12BAA
Starting from the next financial year, employees with income from sources other than salary must submit a new form called Form 12BAA. The CBDT released this form on October 15, 2024.
An amendment to sub-section (2B) of section 192 of the Income Tax Act, 1961, will help salaried taxpayers benefit from tax deductions.
Sharing Financial Information
With Form 12BAA, employees can inform their employers about their financial situations. Employers are responsible for deducting TDS from employee salaries each month and
depositing it with the government. Now, employees can use Form 12BAA to share details about the TDS that has been deducted from their income.
This will help employers determine the correct amount of tax to deduct.
Information Required in Form 12BAA
Form 12BAA will include details such as:
1) Dividends from fixed deposits
2) Insurance commissions
3) Investments in shares
If an employee has made purchases or payments in foreign currency that incurred TCS, they can also report this through Form 12BAA. The form will cover both TDS and TCS information.
Detailed Reporting of TDS and TCS
Employees must provide specific details in Form 12BAA, including:
1) The section under which TDS was deducted
2) The name and address of the person who deducted the TDS
3) The Tax Deduction and Collection Account Number (TAN) of the deductor
4) The amount of tax that was deducted
Similar information must also be provided for TCS.
Claiming TCS Credit for Minor Children
Parents can now claim TCS credit for their minor children due to an amendment in sub-section (4) of section 206C.
This change allows parents whose minor children’s income is included with their own income to claim TCS credit.
Essentially, the TCS credit will be transferred from the minor to the parents.
