• The Central Board of Direct Taxes (CBDT) has announced amendments to income tax rules to ease the tax burden on individual taxpayers.
• The changes include the introduction of Form No. 12BAA, which employees must provide to their employers for TDS deductions.
• The amendments also allow parents to claim TCS credit for minors, previously issued in the minor's name.
• These changes are expected to significantly ease the tax burden on individual taxpayers and simplify the tax system.

In a significant move aimed at easing the tax burden on individual taxpayers, the Central Board of Direct Taxes (CBDT) has announced amendments to the income tax rules. The changes, which were notified through CBDT Notification on Tuesday, are primarily focused on simplifying the process of claiming credit for Tax Collected at Source (TCS) and Tax Deducted at Source (TDS) for salaried employees.

The amendments are a result of changes made to sub-section (2B) of Section 192 of the Income-tax Act, 1961 ('the Act') through the Finance (No. 2) Act, 2024 (FA (No. 2)). The changes include any tax deducted or collected at source under the provisions of Chapter XVII-B or Chapter XVII-BB, as applicable, for the purpose of making tax deductions in the case of salaried employees.

Introduction of Form No. 12BAA

As part of the amendments, the Income-tax Rules, 1962 ('the Rules') have been revised to introduce Form No. 12BAA. This form serves as the prescribed statement of particulars required under sub-section (2B) of Section 192 of the Act. Employees are now required to provide these particulars to their employers, who are responsible for making payments under sub-section (1) of Section 192. The employer, in turn, is required to deduct TDS on salary after taking into account the furnished particulars.

Amendments for Parents of Minors

The amendments also address the issue of claiming TCS credit for parents of minors. Under the new rules, if a minor's income is clubbed with that of the parent, the parent can claim the TCS credit that would have previously been issued in the minor's name. This amendment was made possible through a change in Sub-section (4) of Section 206C of the Act, as outlined in CBDT Notification No. 114/2024 dated 16.10.2024.

The changes to the rules are expected to significantly ease the tax burden on individual taxpayers. For instance, the Individual Liberalised Remittance Scheme (LRS) limit is USD 250,000, requiring an additional 20% for TCS (earnings) for investments exceeding USD 100,000, initially deducted upfront and adjusted with final tax liability and filing. The tax filing deadline is July 31, the following year, and refunds will only be processed 2-3 months after that date.