An employee working in an organization is aware that a small portion of their salary is deducted against Income Tax (Tax deducted at source / TDA) and submitted to the government. For this purpose, an employee is required to declare an estimate of his/her tax-saving investment to their employer. An employee needs to declare his/her investment from the very beginning with the employer as it helps the company to calculate the correct TDS and makes the employee eligible for tax savings.
As there was no specific format for investment declaration, from 1st June 2016 The Central Board of Direct Tax (CBDT) came up with Form 12bb. Form 12bb is a self-declaration form submitted by the employee to the employer which is used to standardize the process of investment declaration.
This form applies to all salaried individuals. Employees are required to reveal their expenses and investment in this form to claim tax exemptions and benefits. This form has to be submitted by the employee by the end of the financial year.
What are the Tax Saving investments and expenses you can claim in Form 12bb?
Form 12bb which is easily available can be downloaded without any hassle and can be submitted to your employer. The first part of the form contains your details like Name, Address, PAN number and the year for which you are declaring investment. The second part requires you to submit investment proofs such as leave travel allowance, House rent allowance, Home loan allowance, section 80c of income tax deduction and many more. The list of claims is as follows:
House rent allowance-
As an employee, you get various benefits from your employer like HRA. This is an allowance you get if you pay rent to your landlord. To claim HRA you have to submit correct information about the house rent in your form 12bb to claim tax benefits. You need to fill in details like the Name and address of the landlord, the rent amount you pay to the owner, PAN card number of the landlord (required only if the rent amount paid by you exceeds Rs 1 lakh during the financial year), rent receipt or rent agreement.
Leave Travel allowance-
Most of the organizations provide you with a leave travel allowance which is also called a leave travel concession for you to utilize for your travel expenses. Employees can submit their leave travel concession information to claim tax benefits or rebates. If you want to claim this allowance then you will have to submit travel related expense proofs like bills, vouchers, tickets etc to your employer. All you have to do is enter the amount and the proof against it to claim this allowance.
Deduction of interest on Loan-
When an employee avails of a home loan, he/she has to make monthly repayments through EMIs. This contains two components-principle amount and interest payable.
According to the IT act, a borrower can enjoy tax benefits on both these components individually. To claim the tax deduction employees have to fill this field in form 12bb and provide details of interest paid, lender’s name, address and PAN card number.
Deductions under Chapter VI-A-
This is the last section of the form where you have to enter the details of your investments or expenditure made under chapter vi A of the IT act. Employees have to provide evidence of the expenditure or investment related to various sections like:
This section covers all medical insurance premiums, Life insurance premiums, school tuition fees for children etc.
Interest to be paid on education loan.
Donations made to specified organizations.
- Avoid submitting forged or fake proof of investment as this can cause you a penalty.
- Form 12bb is documented towards the end of the financial year so submit all verifications before the due date.
- Maintain evidence or copies of verifications submitted to the employer.
- At the beginning of the financial year itself keep a track of all the investments that you intend to submit.
Is it mandatory to submit Form 12bb?
Form 12bb is applicable to all salaried taxpayers. With effect from 1st June 2016, all salaried employees are advised to fill form 12bb and submit it to their employers to benefit from tax deductions. However, if you don’t submit this form, your employer has the right to calculate the TDS and deduct it every month from your salary.
Do I have to submit my form to the Income-tax Department?
No, You need to submit this form to your employer. Your employer will then submit your form to the Income-tax department on your behalf.
Is it mandatory to attach proofs with this form?
Yes, it is mandatory to attach evidence while applying for tax benefits. If no proof is attached your form will be rejected.
It is very important to know the Indian tax system to claim any deduction and enjoy tax benefits whenever possible.
To view and download different kinds of HR Templates, click here.