Form 12BB is essential for any salaried individual for the tax deduction for investments and expenses. While you plan your investments, investing in stable options like fixed deposits or market-linked avenues like mutual funds, it is equally important to know about Form 12BB and submit it to your employer. Form 12BB reveals the investments and expenses you have made or incurred to claim tax exemptions through your employer. Usually, you need to submit Form 12BB in January or February, along with proof of your investment. Based on this information, your employer will compute TDS on your salary.
Before you submit form 12BB for FY 2020-21, here is all you need to know.
What is Form 12BB
Form 12BB is a document 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 under section 192 of the Income-tax Act, 1961. Form 12BB is typically used by employees to provide details of investments or expenses that they have incurred and wish to claim as tax deductions.
Form 12BB must be submitted by the employee to their employer, who will use the information provided in the form to calculate the tax to be deducted from the employee's salary. The form includes details such as the employee's name and PAN number, their salary, and the amount of tax they wish to claim as deductions.
Form 12BB is mandatory for all salaried individuals who wish to claim tax deductions on investments or expenses made during the financial year. It is an important document for both employees and employers as it helps ensure that the correct amount of tax is deducted from an employee's salary.
What is the purpose of Form 12BB
The claims you have made for various tax benefits are listed on Form 12BB. According to Income tax regulations, you are required to submit this form to your employer if you are a salaried employee in order to receive the tax refund. The Form 12BB must be sent in at the conclusion of the fiscal year.
What deductions can you claim via Form 12BB
Here are the deductions you can claim through Form 12BB.
Nature of claims
Evidence or particulars
House rent allowance
Name, address and permanent account number of the landlord/ landlords where the aggregate rent paid during the previous year exceeds rupees one lakh.
Leave travel concession or assistance
Evidence of expenditure
Deduction of interest under the head “Income from house property”
Name, address and permanent account number of the lender
Deduction under Chapter VI-A
Evidence of investment or expenditure
1. HRA (House Rent Allowance)
To claim HRA, add the name and address of your landlord along with copies of your rent receipts. If your total rent crosses Rs. 1 lakh, submit the PAN number of your landlord.
2. LTA (Leave Travel Allowance)/ LTC (Leave Travel Concession)
Add the amount and proof of expenses you have incurred for travel to claim LTA and LTC.
3. Interest payable on home loan
As per Section 24 of the IT Act, you can claim tax benefit for the interest on your home loan by submitting the interest certificate from your lender. Enter the interest amount you have paid along with your lender’s name, address and PAN in Form 12BB to do so.
4. All tax deductions (such as sections 80C, 80D, 80DD, 80G, 80GGA, 80GGC, 80TTA, 80U)
To enjoy tax exemptions for all investments made under Chapter VI A of the IT Act, you will need to fill out Form 12BB with the details and proof of your investments and expenditure.
5. What information is required to be filled in Form 12BB?
Form 12BB is a document that employees in India are required to submit to their employers to claim tax deductions and exemptions. Here is the information that needs to be filled in Form 12BB:
- Name, address, and PAN number of the employee
- Name and address of the employer
- Financial year for which the declaration is being made
- Details of the tax deductions and exemptions claimed by the employee, including:
a. House Rent Allowance (HRA) - Rent paid, name, and address of the landlord
b. Leave Travel Allowance (LTA) - Details of travel expenses incurred
c. Deductions under Chapter VI-A of the Income Tax Act - Investments made in various tax-saving schemes like Life Insurance Premium, Public Provident Fund, Equity Linked Saving Scheme, National Pension System, etc.
d. Interest on home loan - Interest paid on a home loan during the financial year
e. Other exemptions and deductions under the Income Tax Act
The employee must provide supporting documents to prove the expenses or investments made, as applicable. The employer will use this information to calculate the employee's tax liability and deduct TDS (tax deducted at source) accordingly.
Where to invest to claim tax deductions in Form 12BB
You can claim deductions under Section 80C for the life insurance premium you have paid. For any investments done in ELSS, NPS, PPF or a tax-saving deposit, as well as for the education fees paid for your children.
Section 80CCC covers any premium you have paid for an annuity plan, while Section 80CCD covers any additional contribution you have made for NPS.
Section 80D and Section 80E cover medical insurance premiums and interest paid on an education loan, respectively. Include information regarding donations you have made to charity (which need to be recognised as charitable organisations) under Section 80G. Add information related to the interest earned from a savings account under Section 80TTA.
When choosing investments, make sure you weigh the benefits of avenues that offer tax savings and those that help you grow your wealth.