Date: October 16, 2024
In a move aimed at simplifying the process of claiming credit for Tax Collected at Source (TCS) and Tax Deducted at Source (TDS), particularly for salaried employees and minors, the Central Board of Direct Taxes (CBDT) has issued Notification No. 114/2024. This notification introduces amendments to the Income-tax Rules, 1962, which will ease the process of claiming TCS and TDS credits under specific circumstances.
These amendments are part of the government’s continuous efforts to improve tax compliance and reduce the burden on taxpayers by streamlining the processes for claiming TCS/TDS credits.
Key Amendments Introduced by Notification No. 114/2024
1. Credit of TCS for Minors Allowed in the Hands of Parents
A significant change brought about by this notification is the amendment to Rule 37-I of the Income-tax Rules, 1962. Under the new provisions:
- The credit for TCS (Tax Collected at Source) can now be claimed by a person other than the collectee if the income of the collectee (the individual from whom tax was collected) is assessable in the hands of another person. This amendment is particularly beneficial for parents or guardians of minors whose income may be clubbed with their parents’ income.Example: If TCS is collected on income generated in a minor child’s name, the parent/guardian can now claim the TCS credit, provided the minor’s income is assessed in the parent’s hands.
This change simplifies the process for families and ensures that tax credits are available to the person who is liable to pay tax on the income, thus avoiding unnecessary complexity.
2. Ease in Claiming TDS/TCS Credit for Salaried Employees
In addition to the TCS-related amendment, the notification also includes provisions to ease the claiming of TDS credits for salaried employees:
- Salaried employees who have tax deducted at source (TDS) from their salary by employers will now find it easier to claim TDS credits during the filing of their returns. The updated provisions streamline the process, reducing the chances of errors and ensuring that employees receive full credit for TDS amounts.
This change helps salaried employees ensure that their Form 16 (issued by employers) and the TDS details auto-populated in their Income-tax Return (ITR) align correctly, thereby facilitating smooth tax filings.
Objective of the Amendments
The key objectives of these amendments are:
- Simplify TDS/TCS Credit Process: The amendments simplify the process of claiming credit for TDS and TCS, ensuring that taxpayers receive proper credit for taxes deducted or collected on their behalf.
- Ease of Compliance for Parents: By allowing parents or guardians to claim TCS credit on behalf of their minor children, the government is reducing administrative hurdles and ensuring a smoother compliance process for families.
- Improved Accuracy in Tax Filings: The simplified process for salaried employees helps improve the accuracy of TDS credit claims, preventing discrepancies between Form 16 and tax returns, thus avoiding unnecessary tax notices or delays in refunds.
Availability of Notification and Press Release
For more details on Notification No. 114/2024, including the full text and specific legal language, taxpayers and tax professionals can access the official documents:
- Notification No. 114/2024: Available Here
- Press Release: Available Here
These resources provide comprehensive information on the amended rules and the procedural changes for claiming TCS and TDS credits.
Conclusion
The amendments introduced by CBDT Notification No. 114/2024 are a welcome step towards easing the compliance burden for taxpayers, particularly salaried employees and parents claiming tax credits for minors. By streamlining the TDS and TCS credit process, the government continues its efforts to enhance transparency and efficiency in tax administration.
Taxpayers should review the amended provisions carefully and ensure that they take full advantage of the simplified processes while filing their tax returns.
This article provides a detailed overview of the amendments introduced by Notification No. 114/2024 and their impact on taxpayers, particularly those claiming TDS/TCS credits.
Visit www.cagurujiclasses.com for practical courses
