How to reduce TDS using Form 12BAA?
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Reducing TDS using Form 12BAA
Salaried taxpayers often face higher tax deductions at source (TDS) on their salaries despite having paid TDS or tax collected at source (TCS) on other sources of income or expenses. However, they can instruct their employers to deduct lower TDS on salary by submitting Form 12BAA. This form allows them to account for the TDS/TCS they have already paid.
Identify TDS/TCS paid on non-salary income
Taxpayers should gather details of TDS or TCS already paid during the financial year. These may include:#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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TDS on fixed deposit interest, rental income, or professional fees.TCS on high-value transactions, such as foreign remittances or credit card spending.
Form 12BAA
The taxpayer needs to download Form 12BAA from the Income-Tax Department's website or obtain it from the employer. The form requires:Personal details (PAN, name, employer details).Information on TDS/TCS already paid, including deductor name, TAN, transaction details and tax amount.
Submit form
Once filled, the taxpayer must submit Form 12BAA to the employer’s payroll or HR department, preferably at the beginning of the financial year, or as soon as relevant TDS/TCS details are available.Employer adjusts deduction
After verifying the form, the employer will adjust the TDS calculation on salary for the remaining months, reducing unnecessary deductions.
Points to note
Form 12BAA must be submitted before the final months of the financial year to ensure effective TDS adjustments.Any shortfall in tax payments after adjustments must be paid as advance tax to avoid interest penalties.Content courtesy Centre for Investment Educationand Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
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This story originally appeared on: India Times - Author:Faqs of Insurances
