Big Update on Tax Rules: A Game-Changer for Salaried Employees and Parents!
The Central Board of Direct Taxes (CBDT) has introduced significant changes to income tax rules aimed at easing the tax process for salaried individuals and parents. These updates, notified on October 15, 2024, include the introduction of Form No. 12BAA, a new format to streamline the process of claiming Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) credits.
Key Highlights of the New Rules:
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Simpler TDS/TCS Credit Claims:
Salaried employees can now easily claim credit for any TDS or TCS under Chapters XVII-B or XVII-BB of the Income Tax Act, 1961. This is expected to simplify tax filings and reduce tax liability. -
TCS Credits for Parents of Minors:
Parents can now claim TCS credits in cases where a minor’s income is clubbed with theirs. This amendment to Section 206C of the Income Tax Act allows credit transfer with proper declaration. -
Employer’s Role Enhanced:
Employees must now submit relevant details in Form No. 12BAA to their employers, who will use this information to deduct TDS on salaries. The employer will play a crucial role in ensuring accurate tax deductions. -
New Declaration Process for TCS Credit Transfer:
Taxpayers paying TCS can now declare to the collecting institution that the credit should be transferred to another PAN. Details like the recipient’s name, PAN, and reason for the credit transfer must be provided.
A Decade of Growth in Direct Tax Collection:
India’s direct tax collection has seen a remarkable 182% growth over the past decade, reaching ₹19.60 lakh crore in FY 2023-24. Corporate tax collections more than doubled to ₹9.11 lakh crore, while personal income tax collections grew nearly fourfold to ₹10.45 lakh crore during this period.
These changes not only aim to simplify the tax system but also ensure greater convenience and transparency for taxpayers. Whether you’re a salaried individual or a parent managing a minor’s income, these updates could significantly reduce your tax burden.
