Understanding New Tax Form 12BAA: Structure & Benefits

The Central Board of Direct Taxes (CBDT) has introduced a new tax form called 12BAA, particularly made for the disclosure of non-salary income and inclusion of information on Tax Collected at Source (TCS).

As per the guidelines, these forms with the norms emphasized in the Union Budget 2024 will streamline the offsetting of Tax Deducted at Source (TDS) and TCS collected from sources other than salary against the TDS on salary.

What is the New Tax Form 12BAA?

The Form 12BAA is the statement that depicts the particulars for the objective of sub-section (2B) of section 192. The employees need to use the newly introduced Form 12BAA to notify their employers of the deductions incurred from the income that has been derived via sources other than their salaries.

The same sources comprise earnings via fixed deposits, commissions from insurance policies, dividends from investments in equity shares, or taxes collected in the purchase of goods or services, like a car or foreign currency.

What Did the CBDT Include in the New Form 12BAA?

The updated Form 12BAA would comprise of reportage of non-salary income including the information on Tax Collected at Source (TCS). The same is not present in the older version of the form. The updated form is easier and shall need the employees to notify their Tax Deducted at Source (TDS) and TCS collected from sources. The same shall be another intimation to the employer. Including the updated Form 12BAA, the employees shall be required to file Form 12BA.

In What Way Does Form 12BAA Assist the Employees?

Employers have historically deducted TDS from salaries according to the employee’s declaration, taking into account their investments and qualifying expenses for tax deductions. Earlier they do not account for filing taxes through the employee from the additional sources. With the introduction of a new form by the CBDT, the same shall designated to be revised.

The employees through the use of the same form to report TCS collections and TDS deductions can decrease their tax deductions at the source, facilitating the cash flow problems and surging their disposable income. Central Board of Direct Taxes (CBDT) declared officially the new form via a notification dated October 15, 2024.

With effect from October 1, 2024, the new requirement for the employees to reveal other TDS and TCS information to their employers. Now the employees can notify their employers for the TDS deducted via additional income sources or TCS collected on creating expenses.

Nonetheless, the notice did not outline a specific way for employees to convey this information to their employers.

Understanding the Structure of New Form 12BAA

The new tax Form 12BAA would need 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

2024 Budget Regarding Taxes at Source (TCS) and Tax Deducted at Source (TDS)

Initiatives to facilitate the credit claiming procedure for the TCS (tax collected at source) and TDS (tax deducted at source) for salaried individuals have been introduced by the 2024 Budget.

In the presentation of the budget, 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 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. 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 to make the deduction under sub-section (1) of section 192.”

Income Tax Form 12BA?

Employers provide Form 12BA to employees with a salary exceeding Rs 1,50,000, outlining the perquisites they receive. These perquisites may contain rent-free accommodation, contributions to superannuation funds, travelling expenses, and other benefits.

• If the salary of the employee surpasses Rs 1,50,000 then only Form 12BA must be issued. When the salary is less than this threshold, the details of benefits already covered in ‘Part B’ of Form 16 will be adequate, eliminating the need for an additional Form 12BA statement.