Updated 24Q TDS Return Effective from January 2025 - A Relief for Salaried Employees
Updated 24Q TDS Return Effective from January 2025: From October 1, 2024, the government implemented a significant update requiring employers to factor in TDS/TCS deducted on non-salary income when calculating TDS on salary. This move is aimed at minimising excessive TDS deductions often faced by salaried employees, ensuring that taxes already paid on non-salary income are accounted for.
While this legal provision was introduced in 2024, its technical implementation took time. On December 27, 2024, Protean (formerly NSDL e-Governance) confirmed the integration of these updates into the TDS software. As a result, employees will benefit from accurate TDS calculations and certificates starting from Q4 of FY 2024-25.
Updated 24Q TDS Return Effective from January 2025: Key Changes Effective January 2025
1. Adjustment of TDS/TCS on Non-Salary Income
Employers are now required to include the TDS/TCS deducted on non-salary income while calculating TDS on salaries. This ensures employees avoid double taxation or over-deduction of TDS.
Example:
An employee earning ₹15,00,000 annually from a salaried job and ₹3,00,000 from freelance work (with ₹30,000 TDS already deducted on freelance income) will now see a lower TDS deduction on their salary. The employer will compute TDS on the total income of ₹18,00,000, accounting for the ₹30,000 already deducted.
2. Enhanced Reporting in Form 24Q
Form 24Q has undergone key updates to simplify compliance and enhance transparency:
- Column 388: Renamed and renumbered to report TDS deducted by other employers on salary income.
- Column 388A: A new column introduced to capture TDS/TCS deducted by other parties under Section 192(2B), providing a comprehensive breakdown of taxes deducted on all income sources.
These improvements make it easier for employers to comply with regulations and provide better reporting for tax authorities.
3. Increased Standard Deduction for the New Tax Regime
Employees opting for the new tax regime will enjoy an increased standard deduction of ₹75,000, up from ₹50,000. Employers must update their payroll systems to apply this higher deduction accurately.
4. Submission of Form 12BAA
To benefit from lower TDS deductions, employees must submit Form 12BAA to their employers, declaring additional deductions or exemptions under the new tax regime. This adjustment aligns with Notification No. 112/2024-Income Tax issued on October 15, 2024.
Updated 24Q TDS Return Effective from January 2025: Updated Tools for Accurate Compliance
Protean’s updated Return Preparation Utility (RPU) version 5.4 and File Validation Utility (FVU) version 8.9 became operational in December 2024. Employers can use these tools to file TDS returns accurately, incorporating the new provisions in Form 24Q.
The new RPU is available for download at:
Protean TDS RPU 5.4 Download Link
Updated 24Q TDS Return Effective from January 2025: Updated TDS Certificates
TDS certificates issued from Q4 of FY 2024-25 onwards will reflect these changes, providing employees with precise records of tax deductions. This accuracy will be crucial during income tax return filings.
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Updated 24Q TDS Return Effective from January 2025: Impact on Employees and Employers
For Employees:
- Reduced over-deduction of TDS.
- Increased take-home pay.
- Fair taxation by accounting for TDS/TCS on non-salary income.
For Employers:
- Update payroll systems to reflect new TDS calculations and increased standard deductions.
- Use updated TDS software for accurate reporting and compliance.
- Adjust salary TDS based on TDS/TCS already deducted on non-salary income.
- Ensure timely submission of Form 12BAA by employees.
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Conclusion
The TDS amendments effective from January 2025 are a progressive step toward improving tax compliance and fairness for salaried employees. By integrating TDS/TCS on non-salary income, these changes not only enhance tax efficiency but also improve employees’ cash flow by reducing over-deduction.
Employers must adapt to the updated tools and processes to ensure compliance, while employees should proactively disclose additional income and submit Form 12BAA to benefit from the new provisions. These updates, though technical, pave the way for a more equitable and streamlined TDS framework, benefiting all stakeholders.
