New Updates In Form 16, Form 24Q That Taxpayers Should Be Aware Of

The Central Board of Direct Taxes (CBDT) released a new circular, which notified about the updated rules for tax deduction from salary under section 192 of the Income Tax Act, 1961. It also included the changes made in the Finance Act 2024 and 2023.

“The Form No. 16 has been amended vide the Income-tax (Fifth Amendment) Rules, 2023, w.e.f. 1-7-2023 and shall be applicable for the assessment year 2024-25 and subsequent assessment years. Form No. 16 (has been further modified vide the Income-Tax (Eighth Amendment) Rules, 2024, w.e.f. 15- 10-2024,” the CBDT circular said.

The circular was released on February 20, 202,5, and it will be implemented in the tax returns of the financial year 2024-2025 (i.e. assessment year 2025-26).

Changes in Form 16 – Detailed information on tax deduction

A few changes have been applied in Form 16 related to tax deductions and prerequisites. As per the information about different taxes, deductions and exemptions on income, it will be more transparent. If an individual faces trouble filing taxes, the new Form 16 can make things simple.

New column in Form 24Q – TDS/TCS reporting improved

A new column labelled as 388A was also included in the Form 24Q. Information with respect to TDS/TCS deductions will also be added in this column to make tax reporting simpler for both companies as well as employees. This adjustment lowers administrative burdens for employers and also ensures accurate tax withholding records, minimizing issues during filings.

Salary and Perquisites: Key Adjustments

Expanded Salary Definition

Post-Finance Act 2023, contributions made by the Central Government to the Agniveer Corpus Fund (under the Agneepath Scheme) will now be eligible as taxable salary under Section 17(1). However, Agniveers can get deductions for these contributions via Section 80CCH.

Taxable Perquisites

Employers must now inform about the specific non-cash benefits as taxable perquisites, including:

A rent-free place to live offered by employers

Housing is provided at discounted rates

Revised Surcharge Rates under Old Tax Regime

Taxpayers opting for the old regime face updated surcharges, which are as follows: 

Rs 50 lakh–Rs 1 crore: 10 per cent

Rs 1 crore- Rs 2 crore: 15 per cent

Rs 2 crore–Rs 5 crore (excluding dividends/select capital gains): 25 per cent

Above Rs 5 crore (same exclusions): 37 per cent

Over Rs 2 crore (including dividends/select gains): 15 per cent

Why These Changes Matter

It will be imperative to stay updated about Form 16 and 24Q revisions to avoid errors during tax filing. Salaried taxpayers, especially those opting for the old tax regime, must analyse their liabilities under the new surcharge structure. Proactive planning including reviewing exemptions or consulting tax advisors—can optimise outcomes and ensure compliance.

The CBDT’s new rules are aimed at modernising tax administration, prioritising transparency and ease of compliance.