The Central Board of Direct Taxes (CBDT) has made substantial changes to Form 16 and Form 24Q to simplify the ITR Filing process for the year 2025-26. The updates aim to enhance accuracy, eliminate discrepancies, and provide a hassle-free tax-filing experience for both employers and employees.
CBDT published the circular on 20 February 2025, and it will apply to tax returns for the financial year 2024-25 (i.e., assessment year 2025-26).
New column in Form 24Q – Improved TDS/TCS Reporting
Now some new modifications have been done in Form 16 concerning tax deduction and perquisites. In this, the details of various taxes, deductions and exemptions on salary will be clearer. If you are facing difficulty in filing taxes, the new Form 16 can simplify things for you.
New column in Form 24Q – Now TDS/TCS Reporting will be improved
New Column-388A: A new column, 388A, now appears in Form 24Q. Details of other TDS/TCS deductions will be provided in this column to simplify tax reporting for companies as well as employees.
Tax Collected at Source (TCS): On the revisions in Form 16 and Form 24Q update, “Individuals are liable to Tax Collected at Source (TCS) on specific transactions, including overseas remittances, buying costly cars, and foreign tour packages. Taxpayers can adjust the TCS paid throughout the year against their total tax liability, including salary, rent, interest, and dividends. But earlier, employers could not take into account TCS in computing Tax Deducted at Source (TDS) from an employee’s salary. It was putting a burden on employees as, even though they paid good TCS, they were paying full TDS on their salary, resulting in cash flow trouble.
Tax Deducted at Source (TDS): The same problem extended to TDS paid by other payers, such as on FDR interest and dividends, she further states. Even though employees were able to report such income to their employers for TDS deduction, there was no facility for employers to account for TDS already deducted by other payers.
New surcharge rates in the previous tax regime – who pays how much?
If you pay tax in the previous tax regime, your surcharge on your income will be determined as below:
- Income of ₹50 lakh to ₹1 crore – 10%
- Income of ₹1 crore to ₹2 crore – 15%
- Income of ₹2 crore to ₹5 crore (not including dividends and some capital gains) – 25%
- Income over ₹5 crore (other than dividends and specific capital gains) – 37%
- Income over ₹2 crore (including dividends and specific capital gains), not in the above slabs – 15%
Conclusion
The CBDT’s Form 16 and Form 24Q update for ITR Filing 2025 is a move towards more transparency and ease in tax compliance. Employers need to ensure that they comply with these changes while filing the TDS returns, and employees need to go through their Form 16 thoroughly to file their ITRs correctly. These updates are likely to minimize discrepancies and provide a smooth tax-filing experience to all taxpayers.
If you want any other guidance concerning ITR Filing Updates & Announcements, please feel free to talk to our business advisors at 8881-069-069.
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