 "income tax")
When employees declare their investments and expenses to employers for tax benefits each financial year, a document called Form 12BB is at the core of the process.
Employees in the taxable income bracket submit Form 12BB to employers for the purpose of deductions under Section 192 of the Income Tax Act of 1961. In the past, there was no prescribed format for investment declarations. Starting June 2016, Form 12BB became mandatory for salaried individuals to submit Form 12BB to their employer for claiming tax deductions and exemptions
Form 12BB allows salaried individuals to declare expenses and investments, enabling them to claim tax exemptions through their employer. Form 12BB has to be submitted to an employer by the end of the financial year. If an employee forgets to submit Form 12BB to their employer within the prescribed time, the employer will not be able to give you benefit of deductions and other tax exemptions.
Form 12BB plays a crucial role in streamlining the process of claiming tax deductions for employees. This document is designed to capture specific details about an employee's claims within their salary package. These claims encompass a range of allowances, including house rent allowance, food and conveyance allowances, and leave travel concessions, among other components integrated into one's overall salary package.
Employees can download a sample copy of Form 12BB from the Income Tax department's online portal or get it directly from their employers.
Form 12BB is structured into four main sections covering house rent allowance, leave travel concessions or assistance, deduction of interest on borrowing, and other deductions under Sections 80C, 80CCC, and 80CCD of the Income Tax Act. Aside from rental payments and travel allowance, employees can claim deductions on life insurance premiums, public provident fund, equity-linked savings scheme funds, school tuition fees for children, and more. These sections also facilitate claims for benefits on the National Pension Scheme and health insurance plans, among other eligible items,with a cumulative limit of Rs. 1.5 lakh.
Employees are required to submit their proof of investments in Form 12BB to claim benefits. Insufficient proof or missing the investment declaration deadline will result in tax being deducted at source from the employee's net income.
It is crucial to verify the authenticity of investment proofs before submission. Ensure that all your investment proofs are genuine, as you are accountable and responsible for any inaccuracies in your Form 12BB. If the authorities discover fake or incorrect information in Form 12BB, the taxpayer may be liable to pay a penalty of Rs 10,000 under section 271F of the Income tax act.
