All employees are required to submit an investment declaration for the proposed investments for each financial year to his employer at beginning of the financial year. Employers will then compute the proportionate income tax or TDS at the beginning of the financial year (FY) and accordingly withheld on a monthly basis.
Actual declaration of investments is to be made in Form 12BB along with the investments proofs, which is to be submitted to the employer at the end of the fiscal year.
What is Form 12BB?
Form 12BB is prescribed by the Central Board of Direct Taxes (CBDT). Earlier, there was no specific format for making declaration but from 1st June 2016, the process of declaration has been standardized with introducing Form 12BB.
Form 12BB applies to all salaried individuals. Salaried taxpayers are required to declare the investments made during the financial year and submit the proof of investments usually during January- February months.
The Following deductions can be claimed by Salaried Individuals through Form 12BB:
- House Rent Allowance (‘HRA’)
- Leave Travel Allowance (LTA)
- Interest payable on home loan under Section 24(b).
- All Deductions specified under Chapter VI-A, example Section 80C, 80D, 80G etc.
In the first section of Form 12BB, you have to fill the details to claim HRA deduction. For which, you need to provide details such as:
a. Rent amount paid to the landowner
b. Name and address of landowner
c. PAN of the landowner if the rent paid during the year exceeds Rs. 1,00,000
d. Attach Rent receipts/Rent Agreement as a proof of evidence.
e. In case, the rent is paid through cash, you have to affix revenue stamp on the receipts.
The Leave Travel Allowance (LTA) is also known as Leave Travel Concession (LTC) which is given by the employers to their employees, which can be utilised for their travel expenses. LTA is an assistance received by the employee from his employer for travelling on leave. Salaried employees are required to submit travel expenses proofs to their employers if they want to claim tax deduction on LTA/LTC.
Leave Travel Allowance can only be claimed through your employer.
Therefore to claim this, expenditure amount with number of documents and proofs should be mentioned in Form 12BB.
3. Interest payable on home loan under Section 24(b)
To claim tax deduction on interest paid for home loan, you need to provide details like interest paid /payable, lender’s name, lender’s PAN in Form 12BB.
Stamp duty, registration fees and brokerage expenses paid towards transfer of the property can be claimed as deduction.
4. All Deductions specified under Chapter VI-A
Few list of deductions available under Section 80 that you can declare and claim in Form 12BB:
Section 80C: Life insurance Premium paid and investments made in ELSS, PPF, NPS, NSC, school tuition fees paid for children, etc
Section 80CCC: Premium towards pension plans
Section 80CCD: Additional contributions made to National Pension Scheme
Section 80D: Premium paid for medical insurance
Section 80E: Interest paid for education loan
Section 80G: Donations made to specified organizations
Therefore, We strongly suggest you to submit all investment proofs along with Form 12BB on time to the employer to claim deductions.
Let’s understand the tax implications or TDS to be deducted by the employer, in case Form 12BB is submitted or vice-versa:
Mr. Peter has a salary chargeable to tax of Rs.6,00,000, House Property Income of Rs. 50,000, Interest from Fixed Deposits of Rs. 8,000 and made investments under Section 80C of Rs.1,50,000. Lets see the TDS to be deducted by the employer, in case Mr. Peter has submitted the Form 12BB along with investment proofs to the employer or if he has made investment declaration in the beginning of financial year but have not submitted Form 12BB in the end of the year:
|TDS to be deducted by Employer (If Form 12BB is submitted||Amount (Rs)||TDS to be deducted by Employer (If Form 12BB is not submitted at the end of FY)||Amount (Rs)|
|Income from Salary chargeable to tax||6,00,000||Income from Salary chargeable to tax||6,00,000|
|Income from House Property||50,000||Income from House Property||50,000|
|Income from Other Sources- Fixed Deposit Interest||8,000||Income other Sources- Fixed Deposit Interest||8,000|
|Gross Total Income||6,58,000||Gross Total Income||6,58,000|
|Less: Deductions u/s 80 C||1,50,000||Less: Deductions u/s 80 C||-|
|Taxable Income||5,08,000||Taxable Income||6,58,000|
|Total Tax Liability||14,664*||Total Tax Liability||45,864*|
|*Tax Calculation: Rs.5,08,000- 2,50,000 (Basic Exemption)= Rs. 2,58,000
||*Tax Calculation: Rs.6,58,000- 2,50,000 (Basic Exemption) = Rs. 4,08,000
|TDS to be deducted by Employer for the Financial Year||14,664||TDS to be deducted by Employer for the Financial Year||45,864|
|TDS to be deducted by Employer per month||1222 p.m||TDS to be deducted by Employer per month (considering investment declaration) From April-January.||1222 p.m or 12220 for 10 months|
|-||-||TDS to be deducted by employer in last two months (February & March), in case Form 12BB with proofs are not submitted.||33,644|
Therefore, we can see Rs. 33,644 TDS will be deducted in the last two months (Feb & March) due to non-submission of Form 12BB to the employer along with investment proofs. This will result in excess TDS deduction of Rs.31,200 (Rs. 45,864 – Rs. 14,664). Thus, if in any case Mr. J.Peter does not submit investment declaration or Form 12BB (along with proofs), He can still claim the deductions at the time of filing ITR and claim the TDS refund (if any).
Where can one see their TDS deductions?
If you have received any income for which, tax has been deducted at source (TDS) (for e.g. by your employer when paying your salary or dividend paying company when paying dividends on equity shares held by you) it should reflect in Form 26AS. You can download your Form-26AS from your e-filing account on incometaxindiaefiling.gov.in. or from TRACES website. Click Here to know the steps you need to follow to download Form 26AS.
Sometimes, the actual amount of TDS deducted and TDS credited in Form 26AS may differ, this might be due to reasons like non-furnishing or non-filing of TDS returns to the Income Tax Department by the employer, linking the tax deducted with an incorrect PAN, etc.
Is it compulsory to submit Form 12BB?
No, it is not compulsory to submit Form 12BB. But in case you have not declared your investments in the beginning of the financial year and excess TDS has been deducted in initial quarters, don’t worry you can still claim the tax deductions while submitting Form 12BB to your employer at the end of financial year (During January- February).
Do I need to submit the Form 12BB to the Income Tax Department?
No, Form 12BB has to be submitted to your employer at the end of financial year and not to Income tax department.
Supporting Documents to claim deductions:
|Nature of Claim||Type of Document/ Evidence|
|1. House Rent Allowance (‘HRA’)||Rent Receipts/Rent Agreement, PAN of the landlord (if applicable)|
|2. Leave Travel Allowance (LTA)||Travel Bills|
|3. Home Loan Interest||Travel Bills|
|4. Deductions Under Chapter VI-A:|
|Section 80C : Life Insurance Premium (LIC) National Saving Certificate (NSC) Public Provident Fund (PPF) Equity Linked Savings Scheme (ELSS) School Tuition Fees||LIC Premium Receipts NSC Investment Receipts PPF Passbook ELSS Fund Statement/Purchase Details School Tuition Fees Receipt|
|Section 80CCC : Premium towards pension plans||Receipts of Contribution to Pension funds|
|Section 80CCD : Additional contributions made to National Pension Scheme||Receipts of Contribution to Retirement Pension Scheme|
|Section 80D : Premium paid for medical insurance||Mediclaim Policy/ Health Insurance Receipts|
|Section 80E : Interest paid for education loan||Education Loan Statement/ Receipts|
|Section 80G: Donations made to specified organizations||Donation Receipts|
Where can I download a Form 12 BB?
Usually a company may provide its employees a Form 12BB. However, if your employer doesn’t provide you one, you may download the Form 12BB in excel here. Fill it up, sign and submit proof of your tax deductible expenses and investments to your employer.