Received a Tax Notice? Respond and Resolve with our Tax Experts.

Tax filing on Capital Gains
ITR Filing for FY 2024-25 Starting Soon!

Pre-Book Today & Enjoy Exclusive Discounts!

Book Now & Unlock your Discount
  • Trusted Avoid Last-Minute Rush
  • User Rating Faster Refund Processing
  • Secure Hassle-Free Filing with Experts
Tax filing on Capital Gains
linkedin
whatsapp

Form 12BAA: Meaning, Features, and Benefits

Updated on: 21 Jun, 2025 12:25 PM

Form 12BAA was first announced in the Budget announcement 2024, wherein, Finance Minister Smt. Nirmala Sitharaman, announced a new form 12BAA, which will be an extension of the form 12BA. In a bid to implement this announcement, CBDT introduced the new form 12BAA on 15th October and also notified it. This form helps employees declare the tax paid on other income sources to their employers, thus reducing the overall TDS deducted on salary by the employer. This article will explore the meaning, benefits, and features of Form 12BAA in detail.

What is Form 12BAA?

Form 12BAA is a new form or statement that includes the details of TCS and the non-salary income, which were not included in the previous versions. This form requires employees to report their TDS and TCS from other sources. It acts as an additional notice to employers and helps reduce the TDS deduction from salary. Employees have to submit both forms 12BA and 12BAA to their employers.


What are the Key Features of Form 12BAA?

Given below are the key features of Form 12BAA -

  • Makes Reporting Process Easy - Form 12BAA makes the reporting process easier for employees and employers. It allows the employees to provide the details of the tax paid on other income sources to their employer to reduce their tax deductions.
  • Reduces the TDS Deduction from Salary - Form 12BAA helps employees declare the tax they have already paid on other sources of income. Using this information, the employer can calculate and consider all the taxes paid while deducting tax at source.
  • Increases the Employee’s Disposable Income - The reduced tax deduction also increases the overall disposable income of the employee.
  • Improves Cash flow - It also increases the cash flow by reducing the amount of tax deducted from the source. It is especially useful for those facing cash crunch.

What are the Benefits of Form 12BAA?

  • Low TDS on Salary: Form 12BAA allows employees to report TDS on non-salary income. This helps reduce the total TDS deducted from their salary.
  • Better Cash Flow: The reduction in TDS deducted improves the take-home pay of the employee.
  • Comprehensive Reporting of Income: This form requires detailed reporting of various sources of income, which ensures accurate calculation of taxes.
  • Easier Tax Compliance: Form 12BAA simplifies the process of reporting non-salary income. This makes TDS calculation easier for employers.
  • Fewer Refund Claims: Accurate reporting of TDS reduces the chances of employees getting TDS deductions, and thus minimizes the need to claim refunds.

What is the Applicability of Form 12BAA?

Form 12BAA is applicable to all the salaried employees who have income sources beyond salary, such as insurance commissions, fixed deposits, dividends from equity investments, etc.

  • Form 12BAA must be submitted at the beginning of the financial year or while joining employment.
  • If it is not submitted, the employer will assume that the employee has opted for the new regime and calculate taxes accordingly.
  • The declaration is valid only for TDS purposes. The employee can choose a different regime while filing their ITR.

What Information Has to be Provided in Form 12BAA?

The newly introduced Form 12BAA simplifies the reporting process by requiring employees to provide the following:

For Tax Deducted at Source (TDS) -

  • The section under which the tax was deducted.
  • The name and address of the deductor.
  • The deductor’s Tax Deduction and Collection Account Number (TAN).
  • The amount of tax deducted.
  • The income received or credited.
  • Any other relevant details.

For Tax Collected at Source (TCS) -

  • The section under which the tax was collected.
  • The name and address of the collector.
  • The collector’s TAN.
  • The amount of tax collected.
  • Any other important details.

Loss under the head “Income from House Property”

  • Amount
  • Details

How Does New Form 12BAA Help Reduce TDS from Salary?

Form 12BAA is a welcome change in the taxation system as it helps increase the disposable income of the employees by reducing the TDS deduction from salary. Here’s how it helps reduce TDS from salary -

  • The new Form 12BAA was introduced by the CBDT on 15th October, 2024. This change addresses the issue where employers did not previously adjust taxes paid on other income sources when deducting TDS from salaries.
  • Previously, employers based TDS deductions only on employee declarations regarding investments and tax-eligible expenses.
  • The new form allows employees to disclose TCS and TDS from other sources, helping them reduce tax deductions from their salaries.
  • This update helps employees manage cash flow more efficiently and increases their disposable income.

Let’s understand the same with an example:

Mr. Arun has a Salary of Rs. 15,00,000 and a tax liability of Rs. 5,00,000 on the same. He also has an Income from Dividends of Rs. 2,00,000, on which TDS of Rs. 20,000 has already been deducted.

Details Before Form 12BAA After Form 12BAA
Salary Rs. 15,00,000 Rs. 15,00,000
Tax Liability on Salary Rs. 5,00,000 Rs. 5,00,000
Income from Dividends Rs. 2,00,000 Rs. 2,00,000
Total Taxable Income Rs. 17,00,000 Rs. 17,00,000
Effective TDS Liability Rs. 5,20,000 Rs. 5,20,000
TDS on Dividends Rs. 20,000 (not declared) Rs. 20,000 (not declared)
Total TDS deducted by employer Rs. 5,20,000 Rs. 5,00,000
Take-Home Pay Rs. 9,80,000 (after TDS) Rs. 10,00,000 (after TDS)

How to Download and Submit Form 12BAA?

Follow the steps below to download Form 12BAA -

  • Visit the official income tax e-filing portal.
  • Navigate the Forms section.
  • Search for Form 12BAA, and click the download link.
  • Print it or fill it out electronically.

Struggling with Taxes or need help with ITR filing? Get in touch with our experts who can help you with everything, from tax planning to tax filing and notice assistance. Simply book an eCA from Tax2win and experience a seamless and hassle-free ITR filing journey. Book an Online CA now!


FAQs on Form 12BAA

Q- What is form 12BAA?

Employees will use Form 12BAA to notify their employers about tax deductions from income sources beyond their salaries. These sources can include interest from fixed deposits, insurance commissions, dividends from equity shares, or taxes collected during purchases, such as when buying a car or foreign currency. This allows employers to adjust salary deductions accordingly, ensuring accurate tax management.


Q- What is Form 12BA?

Form 12BA is an income tax statement that provides details of perquisites provided by the employer. It is issued when an employee's salary exceeds Rs 1,50,000. Perquisites may include benefits such as rent-free accommodation, contributions to superannuation funds, travel expenses, and other similar perks.


Q- What is the benefit of form 12BAA for employees?

Traditionally, employers deducted TDS from salaries based on employee declarations, which included investments and eligible expenses but excluded taxes from other income sources. The new form changes this approach.

By using Form 12BAA to report TCS and TDS deductions from other income, employees can reduce the amount of tax deducted at the source. This helps improve cash flow and may increase disposable income.


Q- What information can form 12BAA contain?

Form 12BAA allows employees to report both Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) details. Employees are required to disclose the following:

TDS

  • The section under which the tax was deducted.
  • The name and address of the deductor.
  • The deductor's Tax Deduction and Collection Account Number (TAN).
  • The amount of tax deducted.
  • The income received or credited.

TCS

  • The section under which the tax was collected.
  • The name and address of the collector.
  • The collector's TAN.
  • The amount of tax collected.

Q- What is the role of employer’s in tax deductions?

The new form is an essential tool for employees, enabling them to declare their already paid taxes. Given below is the role of employer’s in tax deductions -

  • Employers are required to deduct TDS on salaries based on the information provided by employees under sub-section (1) of Section 192. To facilitate accurate TDS deductions, employees must submit the necessary details via Form 12BAA.
  • The income sources that can be reported may include earnings from fixed deposits, insurance commissions, or dividends from equity investments.
  • Additionally, if an employee has made a significant purchase or paid in foreign currency where TCS was deducted, this information can also be reported using Form 12BAA.

CA Abhishek Soni

CA Abhishek Soni
Founder & CEO at Tax2win

Abhishek Soni is a Chartered Accountant by profession and an entrepreneur by passion. He has wide industry experience in telecom, retail, manufacturing, and entertainment and has handled various national and international assignments. He is the co-founder and CEO of Tax2win.in. Tax2win, an online tax filing platform, provides the easiest way to e-file your Income Tax Return in India. Through Tax2win.in, Abhishek endeavors to revolutionize how individuals file their income tax returns, offering a seamless and user-friendly experience.