Income Tax Department recently launched new Form 12BB. This is the single form to declare HRA, LTA, Section 80, and interest paid on home loans under Sec.24 of IT Act.
All salaried know that at the start of a financial year or while you join the organization newly, then you have to declare the provisional list of products where they want to invest for tax saving. Usually, this will be available on your company’s portal. For example, you have to declare the amount you pay towards life insurance, health insurance, the fee payable to your kid’s, PPF, ELSS or home interest and principal you will pay.
Employers need this information to arrive at your net taxable income after these investments, expenses like HRA and other tax saving options. Based on this, employers calculate the tax payable from you. This tax liability of your’s will be deducted from your salary on the monthly basis and deposited with IT Department.
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As I said above, this is just a PROVISIONAL list. You are not at all obliged to invest that much. Many do so much research while declaration this provisional declaration at the start of financial year. However, do remember that based on your actual investment during the financial year, your tax liability will be fixed.
As the financial year-end approaches, like in the month of January or December, your employer asks you to submit the income proof. Based on this actual proof, they recalculate the income tax liability. Finally, start to deduct the tax deduction up to the month of March.
What are the scenarios you will find in this case?
# Your actual investment is less than a provisional declaration.
Your employer calculates the actual tax liability before the financial year-end and starts to deduct tax based on the actual investment. In such situation, you may end up in paying more tax and your take home salary will drop during these last months of the financial year.
However, if you invest at the last minute, like at the end of March, then your tax liability may go down. However, your employer may already be deducted higher tax. In that case, you have to file IT return at the end of the financial year and get it refunded from IT Department.
# Your actual investment is equal to a provisional declaration.
Your taxable income will be same as per earlier declaration. So based on this, your employer may be deducting tax and you may not feel the pinch of more TDS.
# Your actual investment is more than the provisional declaration.
In such situation, your employer will deduct more tax. Hence, you have to file IT return on your own at the end of the financial year and claim the refund of tax.
As of now, there was no standard form or format to declare all such deductions. However, effective from 1st June 2016, to claim income tax deductions, you must fill the newly launched Form 12BB. Along with that, you have to provide the proof of such investments or expenditure for deductions.
What are the deductions you can claim in Form 12BB?
#House Rent Allowance (HRA)-You can claim HRA exemption under IT Act of section 10 (13A). To claim HRA, you have to documentary evidence like rent receipts. Along with receipts, you have to submit the below information in Form 12BB.
You can claim HRA exemption under IT Act of section 10 (13A). To claim HRA, you have to documentary evidence like rent receipts. Along with receipts, you have to submit the below information in Form 12BB.
- Name of a landlord.
- Address of a landlord.
- PAN number of a landlord.
Note-Permanent Account Number (PAN) shall be furnished if the aggregate rent paid during the previous year exceeds one lakh rupees.
# Leave Travel Allowance (LTA)-Now it is mandatory to submit the travel expenditure proof if you want to claim deductions.
Now it is mandatory to submit the travel expenditure proof if you want to claim deductions.
# Deduction of interest under the head “Income from house property”–
Earlier to claim deductions of interest you paid towards your home loan under Sec.24 of IT act, you used to submit the interest certificate from the bank/financial institution with the total interest and principal paid/due for the FY. However, from now onward, along with this certificate, you have to submit
- Interest amount payable or paid.
- Name of the lender or bank.
- Address of the lender or bank.
- PAN number of the lender or bank.
# Deduction under Chapter VI-A–
Deductions under Chapter VI-A means from Sec.80C to Sec.80TTA. You have to provide the details of such deductions and also the proof needs to be submitted.
By bringing in the Form 12BB, IT department streamlined the claiming of deduction under one roof. Hope this information is helpful for all.
Remember below points-
- You have to use Form 12BB only if you are claiming deductions. Otherwise, it is not mandatory to use while filing IT return.
- Still, there is no need to attach proof while filing IT return. But it is mandatory to show the proof to your employer.
Download the new Format of Form 12BB.