New Delhi: SBI Research in a report has advocated for quicker review of the Income Tax Act as announced in Budget 2024-25.The report recommended that the revised Act be introduced as a money bill so that it can be passed within stipulated 75 days. 

This will not only simplify and streamline taxation process but also aligned with economic growth and inclusivity.The report recommended raising the TDS threshold on bank interest payments from Rs 10,000 to at least Rs 100,000. 

Allowing annual issuance of TDS certificates (Form 16A) instead of quarterly, aligning it with Form 16 for salaries, since Form 26AS is primarily used for credit and a flat tax rate for individuals earning over Rs 8 lakhs, specifically for those aged 60 to 80, with additional provisions for individuals aged 80 and above.

Earlier this month, the Central Board of Direct Taxes (CBDT) has formed an internal committee to oversee a comprehensive review of the Income-tax Act, 1961 (Act), as was announced in the Union Budget 2024-25 by Finance Minister Nirmala Sitharaman. The goal is to make the Act concise, clear, and easy to understand, which will reduce disputes, and litigation, and provide greater tax certainty to taxpayers.

The committee invites public inputs and suggestions in four areas — simplification of the Act; reducing litigation; streamlining compliance; and removal of redundant/obsolete provisions.In SBI Research’s view, this approach is aimed at addressing the practical challenges faced by taxpayers, accountants, and legal professionals, ensuring that their real-world experiences help shape the reforms.

“So, all the stakeholders should participate in evolving tax legislation, which will govern them in future,” SBI Research urged. Further, the SBI Research report authored by SBI’s Group Chief Economic Adviser Soumya Kanti Ghosh said with an increasing alignment with a progressive taxation regime, the contribution of direct taxes to total tax revenue reached 56.7 per cent in the assessment year 2024 (54.6 per cent in 2023), the highest in 14 years. 

The growth rate of Personal income tax (PIT) collections has been surging faster than Corporate tax collections since 2020-21, with PIT increasing by 6 per cent against CIT’s 3 per cent growth.”Direct taxes to GDP ratio inched up to 6.64 % in AY24, highest since 2000-01, vindicating the results of improving tax compliance,” said the report.ITRs filed during 2024 witnessed a phenomenal jump, standing at 8.6 crore (against 7.3 crore in 2022). 

A total of 6.89 crore or 79 per cent of these returns were filed on or before the due date. SBI Research believes the total number of ITRs filing for 2025 could swell to more than 9 crore by the end of March 2025. States such as Maharashtra, Delhi, Gujarat and Karnataka, which have been traditional leaders in income tax base are nearing saturation in ITR filing while UP, Bihar, AP, Punjab and Rajasthan are gaining share in incremental growth of filers. 

TDS for salaried employees: The Central Board of Direct Taxes (CBDT) has introduced a new form, Form 12BAA, to facilitate the implementation of the Budget 2024 announcement regarding the adjustment of TDS and TCS from other sources against salary TDS.
Employees will use Form 12BAA to inform their employers about tax deductions from sources other than their salaries.These sources may include fixed deposits, insurance commissions, dividends from equity shares, or tax collected while making purchases, such as buying a car or foreign currency.
According to the PIB press release dated October 17, 2024, “Vide CBDT Notification No. 112/2024 dated 15.10.2024, the Income-tax Rules, 1962 (‘the Rules’) have been amended, introducing Form No. 12BAA as the prescribed statement of particulars required under sub-section (2B) of Section 192 of the Act. Employees must provide these particulars to their employers, who are responsible for making payments under sub-section (1) of Section 192. The employer, in turn, shall deduct TDS on salary after taking into account the furnished particulars.”
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How does new Form 12BAA help reduce TDS from salary?

Abhishek Soni, CEO of Tax2Win.in, an ITR filing website, told ET, “An employee who wants to lower the tax deducted from salary and hike the take-home pay can use Form 12BAA to inform the employer about taxes deducted from any other source of income or taxes paid while making expenses. Form 12BAA is similar to Form 12BB, which the employee uses to make an investment declaration to the employer so that TDS on salary is deducted accordingly. “
The CBDT has also modified Form 12BB to enable employees to provide additional details about their income beyond salary, report house property losses with verification, and claim TCS credit through their employer.
According to Sudhir Kaushik, CEO of Taxspanner, these changes are intended to curb tax evasion and facilitate faster processing of Income Tax Returns (ITR).
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The 2024 Budget has introduced measures to streamline the process of claiming credit for tax collected at source and tax deducted at source for salaried individuals. This move aims to address the cash flow challenges faced by employees and reduce the compliance burden associated with claiming refunds.
The Budget announcement states, “Representations have been received that credit of TCS paid should be allowed while computing the amount of tax to be deducted on salary income of the employees as this will help in avoiding cash flow issues for employees. Similarly, all TDS may be taken into account for the purpose of deduction of tax from the salary income of employees. Moreover when the TCS etc is not taken into account, the same is required to be claimed as a refund by the employee which adds to the compliance process. In order to ease compliance, it is proposed that sub-section (2B) of section 192 may be amended to expand the scope of the said sub-section to include any tax deducted or collected under the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, to be taken into account for the purposes of making the deduction under sub-section (1) of section 192.”