Form 12BB: Investment Declaration for Employees
Form 12BB: Investment Declaration for Employees
Effective tax planning is essential for salaried individuals to optimize their advance income tax payments by the Income Tax Act 1961. Under this act, employers are tasked with applying Tax Deductions at source (TDS) on employees’ salaries. Employees submit an investment declaration at the beginning of the financial year to facilitate this process for proper assessment. If an individual’s taxable income exceeds the income tax threshold after considering exemptions, the employer deducts monthly taxes in proportion and remits them to the Income Tax Department. The standard format for this investment declaration, recognized by the government, is Form 12BB. Let’s delve further into its specifics for a comprehensive understanding.
Investment Declaration
Investment declaration lets employees tell their employers about their planned tax-saving investments and annual deductions. It helps employers calculate the right amount of tax to deduct from the employee’s salary each month, preventing either too much or too little tax from being taken. Although it’s not required, it’s a good idea to do this at the start of the year or when your financial situation changes. It ensures you receive the correct monthly salary and avoids problems when filing your taxes later.
What is Form 12BB?
Form 12BB serves as a formal declaration made by an employee to request tax deductions. As of June 1, 2016, it has become mandatory for salaried employees to submit Form 12BB to their employers to claim tax advantages and refunds related to their investments and expenditures. This submission typically occurs after the financial year and applies to all salaried taxpayers.
Through Form 12BB, an employee must disclose the financial investments made for the year. Furthermore, supporting documentation for these investments and expenses must be furnished at the close of the financial year.
The Due Date For Submitting Form 12BB
The due date for submitting Form 12BB is typically at the end of the financial year, usually in January or February.
Income Tax Slab Rates
Salaried individuals should know different income tax rates and wisely invest in tax-saving options to reduce tax liability.
Even though they can adjust their investments during the year, they must provide proof of their investments by the end of the financial year to ensure their tax claims are valid and in line with tax rules.
Regular Tax Regime – AY 2023-24:
| Income Range | Tax Rate |
| Up to Rs. 2.5 Lakhs | Nil |
| Rs. 2.5 to Rs. 5 Lakhs | 5% |
| Rs. 5 to Rs. 10 Lakhs | 20% |
| Rs. 7.5 to Rs. 10 Lakhs | 15% |
| Above Rs. 10 Lakhs | 30% |
Health and education cess: 4% of the income tax amount
Surcharge:
- Annual income between Rs. 50 Lakhs and Rs. 1 Cr: 10%
- Annual income between Rs. 1 and Rs. 2 Cr: 15%
- Annual income between Rs. 2 and Rs. 5 Cr: 25%
- Yearly income above Rs. 5 Cr: 37%
Alternate Tax Regime – AY 2023-24:
| Income Range | Tax Rate |
| Up to Rs. 2.5 Lakhs | Nil |
| Rs. 2.5 to Rs. 5 Lakhs | 5% |
| Rs. 5 to Rs. 7.5 Lakhs | 10% |
| Rs. 10 to Rs. 12.5 Lakhs | 20% |
| Rs. 12.5 to Rs. 15 Lakhs | 25% |
| Above Rs. 15 Lakhs | 30% |
Health and education cess: 4% of the income tax amount
Inocme Tax Form 12BB Structure
Completing Form 12BB is a straightforward process. This guide will provide step-by-step instructions for each section, ensuring you include all necessary information and maximize your tax benefits.
Part I: Personal Details
- Full Name
- Address
- PAN (Permanent Account Number)
- Financial Year (Current year: 2023-24)
Part II: Details of Claims and Evidence
House Rent Allowance (HRA)
-
- If you reside in rented accommodation and receive HRA as part of your CTC, you can claim HRA exemption by providing the following information:
- Amount of rent paid to the landlord
- Landlord’s name
- Landlord’s address
- PAN No. of your landlord (if the total annual rent exceeds Rs.1 lakh)
- Submit proof: Monthly rent receipts or rental agreement
Note:
If HRA is not included in your CTC, and you live in a rented house, you can claim a similar tax deduction under section 80GG.
- A rent receipt is required only if your monthly rent exceeds Rs. 3,000.
- You cannot claim HRA exemption if you reside in your own house.
- If you’re paying rent to your parents, they should report it as part of their income when filing their Income Tax Return.
- Avoid submitting fake rent receipts, which could lead to legal issues with tax authorities.
It is recommended to have a formal rent agreement on stamp paper.
Leave Travel Concessions (LTA) or Leave Travel Allowance
To avail of LTA benefits, you must provide travel-related documents such as boarding passes, flight tickets, or travel agent invoices to your employer.
- Eligibility: LTA is applicable if it’s included in your CTC (Cost to Company).
- Beneficiaries: You, your spouse, children, dependent parents, and siblings can benefit from LTA.
- Frequency: You can claim LTA twice within a four-year block (current block: 2022-2025).
- Carry-Forward Option: If you claimed only one LTA in the previous block, you can use it forward in the first calendar year of the next block.
- Domestic Travel Only: LTA applies exclusively to domestic travel; it does not cover international trips, and there is no exemption for accommodation expenses.
Home Loan Interest Deduction
You can claim a deduction for the interest paid on your home loan, as per Section 24 of the Income Tax Act. This deduction applies to the interest paid on loans for building, rebuilding, repairing, buying, or renovating your residential property.
When completing Form 12BB, you should provide the following details:
The interest amount paid or payable to the lender during the financial year, along with the lender’s name, address, and PAN/Aadhaar number.
Apart from this, there are various other tax-saving benefits associated with a home loan:
- Interest Payment: You can deduct the interest paid on loans used for the purchase, construction, renovation, or repair of your property. This deduction is available up to Rs. 2 lakh for self-occupied properties, and there is no limit for rented properties.
- Principal Repayment: You can claim a deduction of up to Rs. 1.5 lakh under Section 80C. This deduction is valid for both self-occupied and rented properties.
Additionally, there are specific deductions for first-time homebuyers:
- Section 80EE: Provides an additional deduction of up to Rs. 50,000 for loans below Rs. 35 lakh on properties under Rs. 50 lakh. This deduction is valid for loans sanctioned until March 31st, 2017.
- Section 80EEA: Offers an extra deduction of up to Rs. 1.5 lakh for loans on properties with a stamp duty value below Rs. 45 lakh. This deduction is applicable for loans sanctioned between April 1, 2019, and March 31, 2022.
Evidence Required for Home Loan Interest Deduction:
- Interest Certificate: Obtained from your lender, indicating the interest paid and the type of loan.
- Possession/Completion Certificate: Required for new or renovated properties.
- Self-Declaration: Specify whether the property is self-occupied or rented.
Deductions under Section 80C, 80CCC, 80CCD
Chapter VI-A of the Income Tax Act encompasses various deductions under sections like 80C (investments), 80D (medical insurance), and 80G (donations). To claim these deductions, you can provide the following proof of your investments or expenses:
| Deduction Type | Investment Proof |
| Public Provident Fund | Copy of the stamped deposit receipt paid during the current financial year or a copy of the passbook clearly stating the PPF account. |
| ELSS mutual fund | Copy the investment certificate in your name with the investment date, investment amount, type of investment, etc. If you plan to continue SIP for February and March, you can also declare it for those months. |
| Life insurance policy | Premiums are paid towards life insurance for yourself, your spouse, and your children. |
| Tax-saving FDs | Copy of the deposit receipt or passbook. |
| NSC | Copy of the NSC Certificate in the employee’s name. |
| Tuition Fees for children | Copy of tuition fee receipts paid to educational institutions, along with details of the nature of payment (donation fees, capitation fees, sports fees, transport fees, uniform and stationery fees, etc.). |
| Post Office Term Deposit | Copy of the deposit receipt (qualifying deposits are those held for over five years). |
| Preventive Health check-ups under section 80D | Copy of premium receipts paid during the year and copies of bills from preventive health check-ups in the name of the employee or family. |
| Medical expenses under section 80DD (for handicapped dependents) | Proof of the amount spent on medical treatment, training, and rehabilitation of handicapped dependents, or- Amount paid towards or deposited in any scheme of LIC, UTI, or any other Board-approved insurer for the maintenance of handicapped dependents, using Form 10-1A. |
| Interest paid on higher education loans | Copy the bank certificate indicating the principal and interest amounts paid and payable. |
| Deduction under section 80U | Deductions for disabilities up to Rs. 75,000 (Rs. 1,25,000 for severe disabilities) can be availed after providing a medical certificate from any government hospital. Submit a copy of the certificate in Form 10-1A issued by a competent medical authority stating the percentage of disability. |
| Donations under section 80G | Valid receipts for donations made that qualify for deductions under this section. Receipts should be in the name of the employee. |
Part III: Verification
The concluding step in Form 12BB involves verifying the information you’ve provided. To complete this section, follow these steps:
- Fill in your full name.
- Include your parent’s name.
- Specify the city.
- Enter the date.
- Affix your signature.
Form 12bb Online Filing Procedure.
To file Form 12BB online, follow these steps:
Download Form 12BB
To download Form 12BB, you can visit the official website of the Income Tax Department. For your convenience, we have attached the form here for quick reference.
Fill in the Details
Fill in all the required details in the form. Provide accurate information for each section as per your investments and deductions.
Sign the Form
Once you’ve filled out the form, you can print it. Sign the printed copy of the form in the designated signature space.
Submit to Employer
Submit the signed Form 12BB to your employer as per the specified deadline, typically in January or February at the end of the financial year.
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