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Form 12BB is a document used by employees to declare their tax-saving* investments and expenses to their employer for accurate TDS deductions.
The new financial year has begun, and you must be wondering how to save tax* on your hard-earned income. You might have heard of various tax-saving investment plans and tax deductions that can reduce your taxable income and increase your take-home pay.
But do you know how to declare these investments and deductions to your employer and the income tax department? Also, do you know what Form 12BB is and how to fill it out correctly?
If not, do not worry. In this blog, we will explain everything about investment declaration and Form 12BB.
What is an Investment Declaration?
Investment declaration is a process of informing your employer about the tax-saving investments and deductions you plan to make during the financial year. It helps your employer to calculate the correct figure of TDS or tax deducted at source from your salary every month. TDS is a way of collecting income tax from the source of income, that is, your employer, as per Section 192 of the Income-tax Act, 1961.
Investment declaration is not mandatory, but it is advisable to do so at the beginning of the financial year or whenever there is a change in your salary or investments. This will ensure that your employer does not deduct excess tax, and you get more money in hand every month. It will also help you avoid any hassle or penalty when filing your income tax return.
What is Form 12BB?
Form 12BB is a document where employees list their tax deductions under Section 192. It is a recent form brought in by the CBDT or Central Board of Direct Taxes on June 1, 2016. It has to be submitted by every salaried employee to their employer at the end of the financial year, along with documentary evidence of their investments and deductions.
Form 12BB is a standard format that applies to all salaried taxpayers. It has four sections that cover the following claims:
House Rent Allowance (HRA)
Leave Travel Concession or Assistance (LTC/LTA)
Deduction of interest on borrowing (Home Loan Interest)
Deductions under Chapter VI-A (Section 80C, 80CCC, 80CCD, etc.)
You can download this investment declaration form from the income tax website or your employer's portal.
How to Fill Form 12BB?
Filling out Form 12BB is not very difficult if you have all the details and proofs of your investments and deductions handy. Here are the steps to follow:
Section 1
Enter your name, address, permanent account number (PAN) or UID number, and financial year in the first section.
Section 2
Enter the details of your HRA claim, such as the amount of rent paid to the landlord, name, address, and PAN or UID number of the landlord. Note that if the total rent you paid in the previous year is over ₹1 lakh, you must provide either the landlord's PAN or UID number.
Section 3
Enter the details of your LTC or LTA claim, such as the amount and evidence or particulars of your travel expenses. You can claim LTC or LTA only for domestic travel within India and for yourself and your family.
Section 4
Enter the details of your home loan interest claim, such as the amount of interest payable or paid to the lender, name, address, and PAN or UID number. If you have taken a loan to buy or build a house you live in, you can get a deduction on home loan interest up to ₹2 lakh according to Section 24(b).
Section 5
Enter the details of your deductions under Chapter VI-A, such as Section 80C, 80CCC, 80CCD, etc. You can claim deductions for various investment plans and expenses such as life insurance premiums, ELSS funds, PPF, NPS, tuition fees for children, medical insurance premiums, education loan interest, donations, etc.
The maximum deduction limit under Section 80C, 80CCC and 80CCD(1) is ₹1.5 lakh. You may also claim an additional deduction of ₹50,000 for NPS contribution under Section 80CCD(1B).
Sign and date the form and submit it to your employer along with the relevant proofs such as receipts, certificates, bills, vouchers, etc.
How to Declare Investment Under Form 12BB
Here is how you can file your tax investment declaration under Form 12BB:
Plan your investments and expenses well in advance and keep track of them throughout the year.
Declare your investments and expenses to your employer at the beginning of the financial year or as soon as possible to avoid excess or shortfall of TDS.
Revise your declaration if there are any changes in your investments or expenses during the year.
Collect and preserve all investment proof documents and expense invoices, such as receipts, bills, certificates, etc.
Submit Form 12BB to your employer at the end of the financial year, along with the proofs or documents supporting your claims.
Verify your Form 16 and Form 26AS after receiving them from your employer and the income tax department, respectively.
File your income tax return on time, claim any refund, or pay any tax due.
Conclusion
Investment declaration and Form 12BB are essential for salaried taxpayers' tax planning and compliance. By completing Form 12BB correctly and on time, you can save tax on your income and increase your take-home pay.
You can avoid any hassle or penalty when filing your income tax return. It is worth noting that you can claim deductions for your investment in various investment plans when filing your income tax returns.
