If you are a salaried person, at the start of each fiscal year, you must inform your employer about any investments that you have made to reduce your taxable income. You are, however, free to revise the declaration throughout the year since it is only an estimate.
Declaring investments is crucial since you can get a higher take-home pay. Your company will also calculate TDS (Tax Deducted at Source) on your pay based on this information. For these reasons, it’s crucial to understand Form 12BB and provide it to your employer when you plan your investments.
In this article, we will cover the details of filing Form 12BB, how to download and fill out the form, and how to submit it. Let’s begin!
Also read: Tax saving scheme in India 2023 [Explained]
What is the 12BB form?
Form 12BB in income tax is a documentation that the employees need to fill out and hand it to their employers, to claim tax deductions and exemptions on their taxable income .
In this document, you may find information on tax-deductible investments, expenses, and allowances. The employer uses this form to evaluate how much tax needs to be correctly withheld from the employee’s salary.
A Form 12BB is often filled out when a financial year starts or upon new employment. However, actual documentation at the end of the year needs to be submitted for you to get the tax exemptions.
The Union Budget’s Finance Act defines the income levels that determine the income tax slab rates that apply to each taxpayer. Consider your tax liabilities based on the tax slab rate when making any investments in tax-saving options. Filling out Form 12BB will only be helpful after that, protecting your net take-home pay.
Form 12BB download procedure
The process of downloading Form 12BB is pretty straightforward. If you want to submit Form 12BB, you can simply download the form from the Income Tax Department website.
How to fill out Form 12BB?
For many of us, completing tax paperwork can be stressful. Filling out Form 12BB, however, isn’t quite as daunting as it seems.
To get the most tax benefit, simply follow these sections. Let’s now go over each section in more depth, one by one:
Here, you need to fill out the following details:
- Full name
- PAN (Permanent Account Number) or Aadhar Number
- Current fiscal year
HRA (House Rent Allowance):
Here is the information that you need to provide to your employer to be eligible for the HRA tax exemption:
- Paid rent amount
- Name and address of your landlord
- Your landlord’s PAN (Permanent Account Number) if the annual rent surpasses ₹1 lakh.
Note that you also need to provide documentation to get an HRA tax exemption. The monthly rent receipts serve as evidence for obtaining an exemption from HRA taxes. Employers often request a rent agreement to get HRA tax exemptions.
LTA (Leave Travel Allowance)
LTA is the sole allowance that saves you money on taxes when you take a vacation. Travel documents such as boarding permits, airline tickets, travel agency invoices, etc., must be sent to the employer by the employee. This tax exemption can only be used up to the amount specified in the CTC for actual travel-related costs.
Deduction of interest on borrowing
If you took out a house loan for building, restoration, maintenance, purchase, or renovation, you are eligible to deduct interest.
Some information that you need to fill out here is payable interest, the name of the lender, the address, and the PAN of the lender.
Deductions under Chapter VI-A
Income tax deductions under the umbrella of Section 80C are covered in this section. You need to keep tabs on your investments or expenses to claim a deduction.
As the final step, Form 12BB requires the “verification” of the information you have put. To complete the form, just input your name, your mother’s or father’s name, the city where you are filling it out, the date, and your signature.
As we discussed, the purpose of Form 12BB is to declare your investments to your company and claim tax benefits on them, which can be a valuable tool for salaried workers.
However, making a statement alone does not ensure that deductions will be approved. Additionally, your Form 12BB and any supporting documentation proving the deductions you claimed under the IT Act of 1961 will be reviewed before tax exemptions.
If you do not submit Form 12BB to your employer, you may not be able to claim the tax benefits or rebates on your investments and expenses. Your employer may deduct higher TDS from your salary, which could reduce your take-home pay.
There is no limit on the number of claims that you can make on Form 12BB. However, the claims are subject to the limits specified under the relevant sections of the Income Tax Act of 1961.
No, Form 12BB and Form 16 are different. Form 12BB is a statement of claims by the employee for deduction of tax, whereas Form 16 is a certificate of TDS issued by the employer to the employee.
Form 12BB is not issued by anyone. It is a self-declaration form that has to be filled out and submitted by the employee to the employer. The employee has to provide the details of their income, allowances, deductions, and exemptions in Form 12BB, along with the documentary evidence.
No, the previous employer does not provide Form 12BB. Form 12BB is a document that the employee must create and submit to their current employer. The employee has to declare the income and deductions from the previous employer in Form 12BB, if any.