Tax Deducted from Income u/h Other Incomes

Form 16 will now indicate the tax deducted from your other income sources in addition to TDS (Tax Deducted at Source) on expenditures made on designated items. This will only take place if you have filed Form 12BBA with your employer.

Changes are introduced in income tax rules due to the amended budget 2024. These amendments are introduced to permit salaried taxpayers to provide information to their employer about the TDS (Tax Deducted at Source) on their other sources of income in addition to TCS from designated expenditures of individuals.

Higher Standard Deduction from Salary under New Tax Regime

The standard deduction from salary has been increased from assessment year 2025-25 (financial year 2024-25) under the new tax regime. Earlier it was Rs. 50,000 and now it has shifted to Rs. 75,000.

If you have chosen the new tax regime in Form 16 for the assessment year 2025-25 (financial year 2024-25) for TDS on salary, then a higher amount of standard tax deduction will be received by you from your salary after tax at source is deducted by your employer. Under the new tax regime, income tax rules permit a standard deduction of Rs. 75,000 for the assessment year 2025-25 (financial year 2024-25).

But if a taxpayer switches to the new tax regime from the old tax regime during filing ITR (Income Tax Return) for assessment year 2025-25 (financial year 2024-25), then a standard deduction of only Rs. 50,000 will be permitted to be claimed as a part of salary income.

Higher NPS Deduction on Contribution of Employer

A higher deduction from gross taxable income is permitted in the new tax regime from assessment year 2025-25 (financial year 2024-25) for the contribution of the employer to NPS.

In the new tax regime, a deduction of up to 14% of basic salary can be claimed by an employee under Section 80CCD (2). This deduction can be claimed on the contribution of the employer to the NPS (National Pension System) account of the employee. This higher deduction will only be offered in your Form 16 if you have opted for the new tax regime for TDS on salary.

Here, it implies the same: if you have switched to the old tax regime from the new tax regime while filing ITR, then the amount of deduction will be decreased. Under section 80CCD (2), an employee is eligible to claim only 10% of his/her basic salary deduction on the contribution of the employer to NPS in the old tax regime.