In order to claim tax exemptions through your employer, you must submit Form 12BB along with proof of your investments in January or February. Your employer calculates TDS based on this information.
People who are required to pay tax ahead of time, also known as tax deducted at source (TDS), are expected to submit investment statements every fiscal year in which they are claiming a deduction. This is beneficial as tax-deductible investment disclosures can lower your tax rate since TDS is deducted from a balanced taxable salary. The investment authentication and confirmation compliance process includes Form 12BB.
Do note that you are not required to present the approximate investment disclosure as a major aspect of this disclosure. However, investment proof is required for later, which is where Form 12BB enters the picture.
What is Form 12BB?
12BB is an announcement of claims made by any person for tax reduction purposes. Through this form, you can proclaim deduction qualified genuine investments made or any such expenditure on which tax return is given. Form 12BB is documented toward the end of the financial year.
Form 12BB should be filed alongside legitimate verification of investments or costs on which you assert tax reductions, which is pertinent to every salaried citizen.
Discover the seamless power of online bookkeeping – empowering your business with real-time insights and financial clarity, all at your fingertips.
Is It Mandatory to File Form 12BB?
With effect from June 1, 2016, every salaried citizen must file Form 12BB with their employer to benefit from tax breaks on eligible investments and expenses. Similarly, submitting supporting written proof along with Form 12BB is required.
Check Here to More about : E-FILE YOUR INCOME TAX RETURNS
What Deductions Will I Be Able to Claim in Form 12BB?
You can proclaim the following tax-deductible pay segments alongside supporting testimony (where pertinent) while filing Form 12BB:
Housing Rent Allowance (HRA)
In the initial portion of Form 12BB, you can give details to guarantee the assessment derivation on Housing Rent Allowance (HRA). Note that to claim HRA, you have to submit the accompanying subtleties:
- Rent receipts alongside the name and address of the landowner.
- PAN of the landowner (if the lease paid is more than ₹ 1 lakh every year)
Effortless tax planning starts here – Use our Income Tax Calculator for a comprehensive analysis of your financial obligations.
Leave Travel Allowance (LTA)
The worker can likewise proclaim LTA for tax exclusion purposes. Section 10 (5) of the Income Tax Act, 1961 gives tax exception benefits on the LTA received by a worker. In any case, tax breaks on LTA can be claimed for travel within the country up to 2 times during 4 years.
Interest in Home Loan
Employees can claim tax derivation benefits on their home loan under Section 80C (principal reimbursed) and Section 24 (home loan interest payment) when documenting form 12BB. You can likewise account for registration expenses, stamp obligation and broker charges for tax findings under different relevant segments.
Important Points To Know Before Filling Form 12BB
- Plan your investments well ahead: Income tax disclosure is made toward the beginning of the year, and their evidence is submitted towards the year’s end.
- Maintain records of verifications submitted: Always keep copies of evidence submitted to an employer or company, as it is not feasible for you to recollect every one of the receipts. The income tax office can request a proof at any time. This is why it is fitting to protect every one of your receipts with you for an extensive timeframe.
- Never submit forged investment proofs: You will be accountable and responsible for forged receipts. If your case goes under examination, unforgiving punishment in the form of a penalty will be levied on you for submitting phoney verifications.
- Submit verifications before the due date: Always dodge a minute submission. Every taxpayer needs to submit bills of different stipends to guarantee tax cuts. In this way, there is a high probability that you will commit errors in submitting proofs. It is recommended to present the same accurately and conveniently to avoid any erroneous conclusion in TDS deduction to avoid a critical situation.
Other Things to Keep on Your Checklist
- If you have switched jobs within a particular year at that point, do not claim the maximum benefit of the deductions at both the old and new company, as your TDS reasoning would not be right, and at last, at the time of filing your Income Tax Return you should pay tax to the Income Tax Department with relevant reformatory interest for late tax payment.
- Every year by January or February, companies and government organisations request for submission of evidence. Nonetheless, employees may likely make some more investments by March end.
- Disclose every one of your ventures and salary to your company previously to maintain a strategic distance from payment of interest u/s 234B and 234C for non-payment or short payment of assessments at the time of documenting your annual tax return.
- Additionally, note that you do not have to surrender any personal tax evidence with your income tax return.
The Takeaway
Vakilsearch is India’s largest platform for all your legal, tax, and compliance needs. We register 10% of all Indian companies. That’s one company every 9 minutes! Phone in for a free expert consultation on over 300+ legal services from our dedicated lawyers who have serviced over 400000+ top clients.
FAQs
What happens if I don't submit Form 12BB?
If you don't submit Form 12BB, you may not be able to claim tax benefits or rebates on investments and expenses. Your employer may also deduct TDS from your salary without considering your declarations.
How do I fill Form 12BB online?
You can fill out Form 12BB online by downloading the form in PDF format from the Income Tax Department's website and filling it out electronically. You can then print the form and submit it to your employer.
What is Form 12BB in PDF format?
Form 12BB is a self-declaration form that employees in India use to declare their investments and expenses that are eligible for tax deductions. It is a statement of claims by an employee for deduction of tax.
What is the due date for submitting Form 12BB?
Form 12BB has to be submitted at the end of the financial year usually in January or February.
What information is required in Form 12BB?
Using Form 12BB, an employee has to declare the investments that they have made during the year. Documentary evidence of these investments and expenses has to be provided at the end of the financial year as well. Investment declaration has to be made for the following tax-saving investments and expenses: house rent allowance, home loan interest, and deductions under sections 80C, 80CCC and 80CCD.
Can I update Form 12BB after the initial submission?
Yes, you can update Form 12BB after the initial submission if you have made any changes to your investments or expenses. You can submit the updated form to your employer.
Is Form 12BB mandatory for all employees?
Yes, Form 12BB is mandatory for all salaried taxpayers to claim tax benefits or rebates on investments and expenses.
What should I do if my employer doesn't provide Form 12BB?
If your employer doesn't provide Form 12BB, you can download the form in PDF format from the Income Tax Department's website and fill it out yourself. You can then submit the form to your employer.
Are there any penalties for submitting incorrect information on Form 12BB?
Yes, there may be penalties for submitting incorrect information on Form 12BB. If the information provided is found to be incorrect or false, the employee may be liable to pay a penalty of Rs. 10,000 under Section 271F of the Income Tax Act.
Can I submit Form 12BB after the financial year ends?
Yes, you can submit Form 12BB after the financial year ends, but it is recommended to submit the form before the due date to avoid any delays in processing your tax declarations
Also, Read the following:
