The Central Board of Direct Taxes (CBDT) has issued a new circular, which states the new rules for tax deduction from salary under section 192 of the Income Tax Act, 1961. It also includes the changes made in the Finance Act 2024 and 2023.
“The Form No. 16 has been amended vide the Income-tax (Fifth Amendment) Rules, 2023, w.e.f. 1-7-2023 and shall be applicable for the assessment year 2024-25 and subsequent assessment years. Form No. 16 (has been further modified vide the Income-Tax (Eighth Amendment) Rules, 2024, w.e.f. 15- 10-2024,” the CBDT circular said.
This circular has been issued on 20 February 2025 and it will be applicable to the tax returns of the financial year 2024-25 (i.e. assessment year 2025-26).
- Changes in Form 16 – Now more details of tax deduction will be available!
Now some new changes have been made in Form 16 related to tax deduction and perquisites. In this, the information about different taxes, deductions and exemptions on salary will be more clear. If you have trouble filing taxes, the new Form 16 can make things easier.
Also read: Claimed 87A tax rebate for capital gains? Income-Tax Dept sending demand notices
- New column in Form 24Q – Now TDS/TCS reporting will be better
Now a new column named 388A has been added to Form 24Q. Information about other TDS/TCS deductions will be given in this column to make tax reporting easier for both companies and employees.
On the changes in Form 16 and Form 24Q, Mousami Nagarsenkar, Partner, Deloitte India, says, “Individuals are subject to Tax Collected at Source (TCS) for certain transactions, such as overseas remittances, purchasing expensive cars, and paying for foreign tour packages. The TCS paid during the year can be offset against their overall tax liability, including salary, rent, interest, and dividends. However, employers previously couldn’t consider TCS when calculating Tax Deducted at Source (TDS) on an employee’s salary. This caused hardship for employees who, despite paying significant TCS, still faced full TDS on their salaries, leading to cash flow challenges.”
The same issue applied to TDS deducted by other payers, like on FDR interest and dividends, she adds. “Although employees could declare such income to their employers for TDS deduction, there was no provision for employers to account for TDS already deducted by other payers.”
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