- Date : 09/06/2020
- Read: 7 mins
Salaried employees need to declare their investments through Form 12BB to claim tax deductions. Learn what is Form 12BB and the various deductions that can be claimed through it.
Income tax payment for most of the salaried employees is relatively hassle-free. They do not have to generally worry about it at the end of the year as their employer deduct tax at source towards the income tax payment. The amount of TDS to be deducted is decided based on the investment plan shared by the employee. At the end of the year, they have to submit the proof of investment along with Form 12BB.
What is Form 12BB?
Form 12BB is the investment declaration form for salaried employees and should contain the details of all investment made in the financial year. The actual investment made can be different from the investment plan submitted at the start of the year. The tax liability is calculated based on actual investments and the individual can claim refund/ submit excess tax while filing the tax return.
Related: Time to submit investment proofs for tax? Here’s the guide
Why is form 12BB required?
On June 1, 2016, the Central Board of Direct Taxes standardised the process for declaring investments made by salaried employees. This was done by introducing Form 12BB for the purpose. Before this, there was no standard form for making such declarations.
Employers typically deduct TDS from the salary paid to the employees, if the salary falls above the tax limit. Employees are expected to share their investment plans to ensure that TDS is in line with the expected tax liability at the end of the year. Employees have to submit the proof of investments in January or February to avoid higher TDS being deducted.
This process was further strengthened through the introduction of Section 192(2D) in the Finance Act, 2015. This section stipulates that the person responsible for the payment of salary must also collect the necessary proofs in the prescribed form.
What are the various deductions that can be claimed through Form 12BB?
The following deductions can be claimed by declaring investment/expense through Form 12BB:
- House Rent Allowance
- Leave Travel Concession or Leave Travel Allowance
- Interest paid on home loan
- All tax deductions under Chapter VI-A which includes deductions under Sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80G, 80GGA, 80GGC, 80TTA, 80U, etc.
Related: Deductions available under Section 80 of the Income Tax Act
House Rent Allowance
The first part of the Form 12BB has the section for claiming tax deduction on HRA. For this, you will have to provide the name and address of your landlord and the actual rent paid. You will have to provide landlord’s PAN in case the annual rent is over ₹1 lakh. Further, you will also have to attach the rent receipts. The receipts will have to be affixed with a revenue stamp if the payment was made in cash.
Related: HRA: Everything you need to know about it
Leave Travel Allowance/ Concession
LTA/LTC can only be claimed through your employer. You will have to submit all your travel proofs to your employer and mention the total amount and the number of documents submitted in the Form 12BB. Remember that you can claim this deduction twice in a block of 4-year period. The current block is 2018-2022.
Related: When is it a good idea to take a top up home loan?
Interest paid on home loan
You will have to provide information like interest paid, lender’s name and address, to claim deduction on interest paid on home loan. You will also have to attach a copy of your loan statement showing the details of payments made.
You can also claim a deduction on stamp duty, registration fee and brokerage expenses when buying a home. It is important to remember that this is only applicable if you have to possession on the home for at least 5 years. If you sell the house before this period has elapsed, you will have to pay the taxes on these expenses as well.
Frequently asked questions (FAQs) regarding investment declaration
1. Why should I declare the investments made by me to my employer?
As your employer is responsible to deduct TDS on your salary, declaring your tax-saving investments allows them to calculate the tax liability accurately and deduct only as much TDS as is necessary to meet your tax liabilities. If you do not declare your investment, your complete income will be treated as taxable income – resulting in higher TDS deduction.
2. When is Form 12BB to be submitted?
Usually, you will have to submit the Form 12BB and corresponding investment proofs to your employer in the month of January or February. You should check this with the finance department of your organisation to avoid any confusion.
How to fill form 12BB?
Form 12BB can be generated online through various portals. The form has five sections. The first section is for your personal details, the next four are for each of the available deductions mentioned above and the last section is for verification.
a) First Section
The section for personal details will ask for your name, fathers name, PAN details, domicile, address, e-mail id and mobile number.
b) Second Section
The second section for HRA will require you to mention the landlord’s name, PAN details, address, rent paid (annually), and evidence of rent (rental agreement or rent receipts).
c) Third Section
For LTA in the third section you need to mention the total expenditure on travel (annual) and mention he attached evidence of the expenditure (flight ticket, railway ticket, etc.)
d) Fourth Section
For deductions pertaining to interest paid on home loans, you will have to furnish the name of the lender, their address, PAN details, total interest payable and corresponding evidence (loan statement, bank certificate, etc.)
e) Fifth Section
The fifth section is for Deductions under Chapter VI-A, which is further divided into two subsections – one for various investments specifically made under Section 80C and the other for all other investments under Section 80CCC, 80CCD, 80D, 80DD, 80DDB, 80G, 80GGA, 80GGC, 80TTA, 80U, etc.
After filling all details, you need to verify the form by filling in your name, place of submission, date and designation, along with your signature.
3. Do I need to submit the form to the Income Tax Department?
No, Form12BB cannot be submitted directly to the Income Tax Department. You will have to submit this to your employer. Form 12BB for pensioners has to be submitted to the erstwhile employers to avail of tax benefits. This will ensure that TDS deducted conforms to your expected tax liability at the end of the year.
4. What happens if I am unable to provide the proofs on time?
If you miss submitting the proofs by the deadline set by your employer, he will deduct additional TDS based on the assumption that investments were not made. There is nothing to worry about. You will be able to claim a tax refund when you file your income tax for the period.
5. Once submitted, can I make changes to form 12BB?
Form 12BB can only be submitted once per employee. If you make any additional investments after you have submitted the form, you will have to claim the same while filing income tax returns. If any excess TDS is deducted, you will be able to claim a refund at the time of filing.
Income tax payment for most of the salaried employees is relatively hassle-free. They do not have to generally worry about it at the end of the year as their employer deduct tax at source towards the income tax payment. The amount of TDS to be deducted is decided based on the investment plan shared by the employee. At the end of the year, they have to submit the proof of investment along with Form 12BB.
What is Form 12BB?
Form 12BB is the investment declaration form for salaried employees and should contain the details of all investment made in the financial year. The actual investment made can be different from the investment plan submitted at the start of the year. The tax liability is calculated based on actual investments and the individual can claim refund/ submit excess tax while filing the tax return.
Related: Time to submit investment proofs for tax? Here’s the guide
Why is form 12BB required?
On June 1, 2016, the Central Board of Direct Taxes standardised the process for declaring investments made by salaried employees. This was done by introducing Form 12BB for the purpose. Before this, there was no standard form for making such declarations.
Employers typically deduct TDS from the salary paid to the employees, if the salary falls above the tax limit. Employees are expected to share their investment plans to ensure that TDS is in line with the expected tax liability at the end of the year. Employees have to submit the proof of investments in January or February to avoid higher TDS being deducted.
This process was further strengthened through the introduction of Section 192(2D) in the Finance Act, 2015. This section stipulates that the person responsible for the payment of salary must also collect the necessary proofs in the prescribed form.
What are the various deductions that can be claimed through Form 12BB?
The following deductions can be claimed by declaring investment/expense through Form 12BB:
- House Rent Allowance
- Leave Travel Concession or Leave Travel Allowance
- Interest paid on home loan
- All tax deductions under Chapter VI-A which includes deductions under Sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80G, 80GGA, 80GGC, 80TTA, 80U, etc.
Related: Deductions available under Section 80 of the Income Tax Act
House Rent Allowance
The first part of the Form 12BB has the section for claiming tax deduction on HRA. For this, you will have to provide the name and address of your landlord and the actual rent paid. You will have to provide landlord’s PAN in case the annual rent is over ₹1 lakh. Further, you will also have to attach the rent receipts. The receipts will have to be affixed with a revenue stamp if the payment was made in cash.
Related: HRA: Everything you need to know about it
Leave Travel Allowance/ Concession
LTA/LTC can only be claimed through your employer. You will have to submit all your travel proofs to your employer and mention the total amount and the number of documents submitted in the Form 12BB. Remember that you can claim this deduction twice in a block of 4-year period. The current block is 2018-2022.
Related: When is it a good idea to take a top up home loan?
Interest paid on home loan
You will have to provide information like interest paid, lender’s name and address, to claim deduction on interest paid on home loan. You will also have to attach a copy of your loan statement showing the details of payments made.
You can also claim a deduction on stamp duty, registration fee and brokerage expenses when buying a home. It is important to remember that this is only applicable if you have to possession on the home for at least 5 years. If you sell the house before this period has elapsed, you will have to pay the taxes on these expenses as well.
Frequently asked questions (FAQs) regarding investment declaration
1. Why should I declare the investments made by me to my employer?
As your employer is responsible to deduct TDS on your salary, declaring your tax-saving investments allows them to calculate the tax liability accurately and deduct only as much TDS as is necessary to meet your tax liabilities. If you do not declare your investment, your complete income will be treated as taxable income – resulting in higher TDS deduction.
2. When is Form 12BB to be submitted?
Usually, you will have to submit the Form 12BB and corresponding investment proofs to your employer in the month of January or February. You should check this with the finance department of your organisation to avoid any confusion.
How to fill form 12BB?
Form 12BB can be generated online through various portals. The form has five sections. The first section is for your personal details, the next four are for each of the available deductions mentioned above and the last section is for verification.
a) First Section
The section for personal details will ask for your name, fathers name, PAN details, domicile, address, e-mail id and mobile number.
b) Second Section
The second section for HRA will require you to mention the landlord’s name, PAN details, address, rent paid (annually), and evidence of rent (rental agreement or rent receipts).
c) Third Section
For LTA in the third section you need to mention the total expenditure on travel (annual) and mention he attached evidence of the expenditure (flight ticket, railway ticket, etc.)
d) Fourth Section
For deductions pertaining to interest paid on home loans, you will have to furnish the name of the lender, their address, PAN details, total interest payable and corresponding evidence (loan statement, bank certificate, etc.)
e) Fifth Section
The fifth section is for Deductions under Chapter VI-A, which is further divided into two subsections – one for various investments specifically made under Section 80C and the other for all other investments under Section 80CCC, 80CCD, 80D, 80DD, 80DDB, 80G, 80GGA, 80GGC, 80TTA, 80U, etc.
After filling all details, you need to verify the form by filling in your name, place of submission, date and designation, along with your signature.
3. Do I need to submit the form to the Income Tax Department?
No, Form12BB cannot be submitted directly to the Income Tax Department. You will have to submit this to your employer. Form 12BB for pensioners has to be submitted to the erstwhile employers to avail of tax benefits. This will ensure that TDS deducted conforms to your expected tax liability at the end of the year.
4. What happens if I am unable to provide the proofs on time?
If you miss submitting the proofs by the deadline set by your employer, he will deduct additional TDS based on the assumption that investments were not made. There is nothing to worry about. You will be able to claim a tax refund when you file your income tax for the period.
5. Once submitted, can I make changes to form 12BB?
Form 12BB can only be submitted once per employee. If you make any additional investments after you have submitted the form, you will have to claim the same while filing income tax returns. If any excess TDS is deducted, you will be able to claim a refund at the time of filing.
