On October 15, 2024, the Central Board of Direct Taxes (CBDT) issued Notification No. 112/2024, introducing the Income-tax (Eighth Amendment) Rules, 2024. These amendments bring significant changes related to tax deduction at source (TDS) and tax collection at source (TCS), specifically concerning section 192(2B) of the Income-tax Act. The modifications are intended to streamline the reporting process, improve transparency, and ensure accurate computation of TDS.
Key Highlights of the Amendments:
Changes in Rule 21AA (Relating to Section 89):
- The rule now refers to section 89 in its entirety, dropping the specific reference to subsection 89(1). This modification ensures that the rule aligns with all the provisions under section 89, which relates to the relief on salary arrears or advance payments.
Updates to Rule 26B:
- Rule 26B, which deals with declarations for claiming relief under section 89(1), has been revised. Taxpayers can now report income from sources other than salary and TDS/TCS through Form 12BAA, which has been newly introduced to capture relevant data for TDS computation under section 192.
Introduction of Form 12BAA:
- This new form allows employees to disclose their income from sources other than salary, including any losses under the head ‘income from house property’, enabling employers to accurately compute TDS under section 192. The form ensures a seamless process for including other sources of income in TDS calculations.
Modifications to Existing Forms:
- Form 10E (for claiming relief under section 89), Form 16 (salary certificate), and Form 24Q (TDS return for salaries) have been updated to incorporate these changes. New columns have been added to report income from other sources, TDS, and TCS, ensuring comprehensive documentation across different income types.
Form 16 and 24Q:
- These essential forms used for salary-related TDS and TDS returns have been updated to include new columns that capture details related to TDS and TCS under section 192(2B), ensuring that employees and employers accurately report taxes deducted or collected at source.
Implications:
- The introduction of Form 12BAA provides a streamlined process for employees to report additional income and ensures that TDS is accurately calculated by their employers.
- The amendments facilitate compliance with the Income-tax Act by enhancing the transparency and accuracy of tax reporting under section 192(2B).
- Employers and tax professionals should familiarize themselves with the updated forms and rules to ensure proper implementation and compliance with the new regulations.
These updates reflect the government’s ongoing efforts to simplify tax administration, enhance transparency, and ensure accurate tax deductions across all sources of income.
The changes introduced by the Income-tax (Eighth Amendment) Rules, 2024, provide greater clarity and a more structured process for reporting TDS and TCS under section 192(2B). With the introduction of Form 12BAA, taxpayers can now ensure accurate computation of TDS, even for income from sources other than salary, while employers can fulfill their tax deduction obligations more efficiently.
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