For salaried individuals, making smart investments is an ideal way to save tax and create savings. At the start of a financial year in April, an individual must submit investment declarations to their employer so that appropriate taxes are deducted. For this, Form 12BB must be filled out and submitted. In this guide, we will understand the procedure for filling out Form 12BB and declaring expenses and deductions.
What is Form 12BB?
Form 12BB is the statement of expenses and claims by all salaried professionals for tax deduction purposes. With effect from June 1, 2016, a salaried employee must submit Form 12BB to their employer at the end of a financial year to claim tax benefits or rebates on investments.
Significance of Form 12BB
Form 12BB is an important document for employees to declare their annual investments, expenses and other income details. This enables the employers to calculate the tax to be deducted from the employee’s salary. This helps in fewer deductions and more take-home salary for the employee. Along with Form 12BB, an employee must provide supporting documents as proof of investments and expenses at the end of the financial year.
What does Form 12BB contain?
In Form 12BB, an employee must provide details of salary, allowances, tax deductions and investments made during the financial year. They must declare any other income earned during the year. The form contains specific columns for each type of income and investment where an employee can fill in their details accordingly.
Form 12BB: Sample
| FORM NO. 12BB [See rule 26C] | |||
| 1. Name and address of the employee: | |||
| 2. [Permanent Account Number or Aadhaar Number] of the employee: | |||
| 3. Financial year: | |||
| DETAILS OF CLAIMS AND EVIDENCE THEREOF | |||
| Sl. No. | Nature of claim | Amount (Rs.) | Evidence/particulars |
| (1) | (2) | (3) | (4) |
| 1. | House Rent Allowance:
Rent paid to the landlord Name of the landlord Address of the landlord [Permanent Account Number or Aadhaar Number] of the landlordNote: [Permanent Account Number or Aadhaar Number] shall be furnished if the aggregate rent paid during the previous year exceeds one lakh rupees |
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| 2. | Leave travel concessions or assistance | ||
| 3. | Deduction of interest on borrowing:
(i) Interest payable/paid to the lender (ii) Name of the lender (iii) Address of the lender (iv) [Permanent Account Number or Aadhaar Number] of the lender (a) Financial Institutions (if available) (b) Employer (if available) (c) Others |
||
| 4. | Deduction under Chapter VI-A
(A) Sections 80C, 80CCC and 80CCD (i) Section 80C (a) ………………………….. (b) ………………………….. (c) ………………………….. (d) ………………………….. (e) …………………………..
(ii) Section 80CCC (iii) Section 80CCD
(B) Other sections (e.g. 80E, 80G, 80TTA, etc.) under Chapter VI-A (i) section………………………… (ii) section………………………… (iii) section………………………… (iv) section………………………… (v) section………………………… |
||
| Verification
I, ……… son/ daughter of ……………….. do hereby certify that the information given above is complete and correct. Place ………….. ………………………….. Date ………….. (Signature of the employee) Designation ………….. Full Name: ………………………………… |
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Source: incometaxindia.gov.in
How to fill out Form 12BB?
Personal details
The first step is to provide personal information:
- Full name
- Employee code
- Designation
- Address
- Permanent Account Number (PAN)
- Financial year
Information about claims and proofs
House Rent Allowance (HRA)
If an employee resides in a rented accommodation and has an HRA as part of their CTC, they can claim an HRA exemption by submitting the following details:
- Rent amount
- Landlord’s name
- Landlord’s address
- Landlord’s PAN if the total rent paid during the year is more than Rs 1 lakh.
- Monthly rent receipts or rental agreements submitted as proof
Note: If the HRA is not a part of the CTC and the employee lives in a rented house, they can claim tax deduction under section 80GG.
- A rent receipt is required if the monthly rent is above Rs 3,000.
- HRA exemption cannot be claimed if one is residing in their own house.
- If rent is paid to one’s parents, they must report it as part of their income when filing their income tax returns.
- Submitting fake rent receipts can lead to punishment.
- When submitting a formal rent agreement, make sure it is printed on a stamp paper.
Leave travel allowance (LTA)
An employee should submit travel documents, such as boarding passes, flight tickets or travel agent invoices to the employer to claim LTA benefits.
- An employee can claim LTA only if it is part of their CTC.
- It can be claimed for self, spouse, children, dependent parents and dependent siblings.
- LTA benefits can be claimed twice within a four-year block.
- If an individual has claimed only one LTA in the previous block, they can carry it forward and use it in the next block’s first calendar year.
- LTA benefits are applicable only on domestic travel.
- There is no exemption for accommodation expenses.
Home loan interest
An employee can claim a deduction on their home loan interest under Section 24 of the Income Tax Act. It is applicable on the interest paid on a loan taken for building, rebuilding, repairing, buying or renovating your home.
In Form 12BB, an employee has to furnish the following details:
- The interest paid or payable to the lender during the year along with the name, address and PAN/Aadhaar number of the lender.
- The following proofs have to be submitted:
- Interest certificate from lender, reflecting interest paid and loan type
- Possession/completion certificate: For new or renovated properties
- Self-declaration: Whether the property is self-occupied or rented
Deductions under Section 80C, 80CCC and 80CCD
Chapter VI-A of the Income Tax Act covers deductions under various sections of the Income Tax Act, such as 80C (investments), 80D (medical insurance) and 80G (donations). The proofs of investments or expenses should be submitted to claim these deductions. Some examples are mentioned below:
- Public Provident Fund (PPF)
- ELSS mutual fund
- Life insurance policy
- Tax-saving FDs
- Medical expenses under section 80D
- National savings certificate
Declaration
The employee must sign the declaration stating that the information provided is true and accurate.
FAQs
What is Form 12BB?
Form 12BB is an investment declaration form for an employee to furnish details of their income, deductions and investments to their employer.
How do I file form 12BB?
Form 12BB is divided into various sections, such as personal information, salary details, rent paid and deductions, under different sections of the Income Tax Act and declaration. An employee has to fill these sections accordingly.
Who needs to fill out Form 12BB?
All salaried individuals should fill and submit Form 12BB to their employers at the start of every financial year.
What is the difference between 12B and 12BB?
Form 12BB is an investment declaration form that an employee should fill out and submit to their employer every year. Form 12B, according to Rule 26A, is an income tax form that an individual who joins a new company in the middle of the year must submit.
Does the previous employer provide Form 12BB?
Form 12BB must be filled and submitted to one’s current employer.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |