CBDT vide Notification No. 15 of 2021 dated 11.03.2021 and Income-tax (3rd Amendment) Rules 2021 has amended and notified Revised Form No. 16 for Part B (Annexure), Revised Form No. 12BA and Form No. 24Q Annexure-II related to Income from Salary of employees paid by the employers.
The last time CBDT revised Form 16 was in 2019 when the changes and revised Form 16 was notified vide Notification 36/2019.
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CBDT Circular on TDS from Salary under 192 for AY 2021-22 (FY 2020-21)
CBDT Circular on TDS from Salary under 192 for AY 2020-21 (FY 2019-20)
This time vide Notification 15 of 2021, CBDT notifies the following changes in Form 16, changes in Form 24Q and changes in Form 12BA.
1. Notified Changes in Part B (Annexure) of Form 16
There is only one change notified in Part B (Annexure) of Form 16. In Part-B of Form 16, the employer has to report whether the employee has opted for the new tax regime under section 115BAC.
Readers are aware that section 115BAC is introduced by the Finance Act, 2020 to provide for a lower rate of tax to individuals and HUF without claiming any allowances and deductions. Further, a salaried individual having no business income can opt for and opt-out from section 115BAC in any year for any number of times without any restriction.
Further CBDT has also clarified the procedure for deduction of tax by the employer when the employee opts for the new tax regime under section 115BAC. The detailed guidelines can be accessed here.
At the top of Form 16, Part-B (Annexure), the following row is inserted to incorporate the changes-
2. Notified Changes in Annexure-II of Form No. 24Q
Similar to Form 16, there is only one change notified in Annexure-II of Form No. 24Q. In the annexure of Form 24Q, while reporting the salary income details of the employee, the employer has to report whether the employee has opted for the new tax regime under section 115BAC.
For this purpose, existing Column No. 332 is split into two new columns - Column No. 332A and Column No. 332B.
While Col. No. 332A contains the old value of Col. 332 being the ‘Name of the employee’, the new column 332B requires to report “Whether opting for taxation u/s 115BAC [Yes/No]”.
Annexure-II is required to be filed with the 4th quarter of Form 24Q by the employer. The Annexure-II of Form 24Q contains the details of the salary income, exemption allowed and deduction claimed, and tax paid and deducted by the employer/previous employer. From the data contained in this Annexure, Form 16 Part-B as well as ITR is prefilled by the income-tax department.
3. Notified Changes in Form No. 12BA
Major changes have been notified for Form 12BA. Form 12BA requires reporting of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof paid or provided to the employee by the employer.
The following four changes are notified in Form 12BA. The changes are notified to incorporate the changes or amendments introduced in the taxation of salary income by the Finance Act, 2020.
Four new columns are introduced in the Form 12BA - Col 16, Col. 17, Col. 18 and Col. 19.
(i) Substituted Col. 16 of Revised Form 12BA: In the new Revised Form 12BA, Col 16 is amended to require reporting of “Stock options allotted or transferred by employer being an eligible start-up referred to in section 80-IAC.”.
Existing Cols. 17, 18 and 19 have been renumbered as Cols., 20, 21, and 22 respectively. New Cols. 17, 18 and 19 are discussed below.
(ii) Substituted Col. 17 of Revised Form 12BA: In the new Revised Form 12BA, Col 17 is substituted to report “Stock options (non-qualified options) other than ESOP in col 16 above.”.
(iii) Substituted Col. 18 of Revised Form 12BA: In the new Revised Form 12BA, Col 18 is substituted to report “Contribution by employer to fund and scheme taxable under section 17(2)(vii).”.
(iii) Substituted Col. 19 of Revised Form 12BA: In the new Revised Form 12BA, Col 19 is substituted to report “Annual accretion by way of interest, dividend etc. to the balance at the credit of fund and scheme referred to in section 17(2)(vii) and taxable under section 17(2)(viia).”.
In this context, it should be noted that the Finance Act, 2020 has amended the provisions of section 17(2)(vii) of the Act to provide that the amount or the aggregate amounts of any contribution made by the employer in respect of the assessee, to the account of an assessee in a recognised provident fund; in the scheme referred to in subsection (1) of section 80CCD (NPS); and in an approved superannuation fund shall be treated as a perquisite, to the extent it exceeds Rs. 7,50,000 in a previous year.
In other words, clause (vii) of section 17(2) provides that perquisites would include the amount of any contributions made by the employer to the account of an employee in a recognised Provident Fund, NPS, etc. to the extent it exceeds Rs. 7.50 Lakh in a year.
Further, Finance Act, 2020 has inserted a new sub-clause (viia) in section 17(2) so as to provide that annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme referred to in sub-clause (vii) may also be treated as perquisite to the extent it relates to the contribution referred to in the said new sub-clause (vii), which is included in total income and shall be computed in the prescribed manner.
In other words, clause (viia) of section 17(2) provides that amount of interest, dividend etc. (known as annual accretion) earned on such funds or schemes to the extent it relates to the employers’ contribution in excess of Rs. 7.50 Lakh in the employees account as stated in clause (vii) above, shall also be included in perquisites to be computed in the prescribed manner.
The above-mentioned amendments are applicable from AY 2021-22.
The manner of computation of such annual accretion in the provident and other welfare funds specifying the method of computation of perquisite u/s 17(2)(viia) is notified by Notification 11 of 2021 dated 5.3.2021 and inserted new Rule 3B in the Income Tax Rules, 1962 for this purpose.
Read the full text of Notification 15/2021 dated 11.03.2021 on Changes in Form 16, Form 24Q and Form 12BA
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 11th March, 2021
G.S.R. 170(E). —In exercise of powers conferred by sections 200 and 203 read with section 295 of the Income- tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—
1. Short title and commencement – (1) These rules may be called the Income-tax (3rd Amendment) Rules, 2021.
(2) They shall come into force on the 1st day of April, 2021.
2. In the Income-tax Rules, 1962, in Appendix II,-
(i) For Form No. 12BA, the following shall be substituted, namely:–
“FORM NO. 12BA
[See rule 26A(2)(b)]
Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof
DECLARATION BY EMPLOYER
I, _______, s/o _______________________ working as_________(designation) do hereby declare on behalf of ____________ (name of the employer) that the information given above is based on the books of account, documents and other relevant records or information available with us and the details of value of each such perquisite are in accordance with section 17 and rules framed thereunder and that such information is true and correct.
Place Full Name
Date Designation
Signature of the person responsible for deduction of tax.”;
(ii) In Form No. 16, for Part B (Annexure), the following shall be substituted, namely :-
“PART B (Annexure)
Notes:
1. Government deductors to fill information in item I of Part A if tax is paid without production of an income-tax challan and in item II of Part A if tax is paid accompanied by an income-tax challan.
2. Non-Government deductors to fill information in item II of Part A.
3. The deductor shall furnish the address of the Commissioner of Income-tax (TDS) having jurisdiction as regards TDS statements of the assessee.
4. If an assessee is employed under one employer only during the year, certificate in Form No. 16 issued for the quarter ending on 31st March 2021 of the financial year shall contain the details of tax deducted and deposited for all the quarters of the financial year.
5. (i) If an assessee is employed under more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers.
(ii) Part B (Annexure) of the certificate in Form No.16 may be issued by each of the employers or the last employer at the option of the assessee.
6. In Part A, in items I and II, in the column for tax deposited in respect of deductee, furnish total amount of tax, surcharge and health and education cess.
7. Deductor shall duly fill details, where available, in item numbers 2(f) and 10(k) before furnishing of Part B (Annexure) to the employee.”;
(iii) in Form No. 24Q, for “Annexure II”, the following Annexure shall be substituted, namely:–
Notes:
1. Salary includes wages, annuity, pension, gratuity (other than exempted under section 10(10), fees, commission, bonus, repayment of amount deposited under the Additional Emoluments (Compulsory Deposit) Act, 1974 (37 of 1974), perquisites, profits in lieu of or in addition to any salary or wages including payments made at or in connection with termination of employment, advance of salary, any payment received in respect of any period of leave not availed (other than exempted under section 10 (10AA), any annual accretion to the balance of the account in a recognised provident fund chargeable to tax in accordance with rule 6 of Part A of the Fourth Schedule of the Income-tax Act, 1961, any sums deemed to be income received by the employee in accordance with sub‐rule (4) of rule 11 of Part A of the Fourth Schedule of the Income-tax Act, 1961, any contribution made by the Central Government to the account of the employee under a pension scheme referred to in section 80CCD or any other sums chargeable to income-tax under the head 'Salaries'.
2. Where an employer deducts from the emoluments paid to an employee or pays on his behalf any contributions of that employee to any approved superannuation fund, all such deductions or payments should be included in the statement.
3. Permanent Account Number of landlord shall be mandatorily furnished where the aggregate rent paid during the previous year exceeds one lakh rupees.
4. Permanent Account Number of lender shall be mandatorily furnished where the housing loan, on which interest is paid, is taken from a person other than a Financial Institution or the Employer.”.
[Notification No. 15/2021/F.No. 370142/04/2019-TPL]
ANKIT JAIN, Under Secy. (Tax Policy and Legislation)
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide notification number S.O. 969(E) dated the 26th of March, 1962 and were last amended vide notification number G.S.R No. 162(E) dated the 09th of March, 2021
Download Copy of Notification 15/2021 dated 11.03.2021 on Changes in Form 16, Form 24Q and Form 12BA in pdf format
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