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An Income Tax* Declaration involves providing detailed information about your income, expenses, and investments to the relevant tax authorities. This may include the total income from all sources, including insurance premiums, House Rent Allowance (HRA), housing or educational loans, etc.
As a taxpayer, you are liable to pay a certain amount of tax* to the government based on your income. As per the rules, your company or employer is responsible for taking out a portion of your income every month and transferring it to the government as tax.
However, one can claim their tax benefits with the help of a tax declaration. Below is a complete guide on what tax declaration is, how to fill out tax declaration details, different types of investment declarations, and the role of Form 12 BB.
What is an Income Tax Declaration?
An Income Tax Declaration in India refers to the process of providing detailed information about your income, expenses, investments and other financial matters to the government. It is based on the amount of what you earn, like your salary, profits gained from a business, rental income, etc.
The main purpose of a tax declaration is to calculate and report the amount of income tax that an individual or entity owes to the government.
As a thumb rule, you must file a tax declaration at the start of the financial year. Employees are also required to submit proof of their expenses or investments to support their declaration.
Steps to File a Tax Declaration on Your Income
By making use of the newly designed Income Tax portal, you can use a variety of functions intended to streamline the process of filing taxes. Enlisted below is a step-by-step guide on the income tax file declaration procedure.
Visit the official website of the Income Tax e-filing portal.
Search for the Income Tax Forms section and download the Income Tax Declaration Form 12BB.
Upon downloading, fill in the form for all your personal details. This may include your name, address, date of birth, gender, etc.
After filling out the personal details, make sure to include the tax declaration details such as housing loans, rental allowance, premium paid for life insurance plans (if applicable), personal investments, and other financial matters.
Next, sign the form after checking all the relevant details and submit it to your employer.
What is Form 12BB?
The Form 12BB was created to calculate the tax to be deducted at source, also known as TDS. It was introduced under Section 192 of the Income-tax Act, 1961. The income tax declaration form applies to salaried employees who pay an income tax to the Government of India.
In general, Form 12BB is a piece of document that employees use to declare their investments and expenses eligible for tax deductions. It is designed to document the particulars of claims by an employee for tax declaration payment.
Common Types of Investments and Expenses that Can Be Declared
House Rent Allowances (HRA)
You can claim your house rent that is paid to the landlord in Form 12BB. In order to achieve this, you must provide the name of the landlord, PAN details and address for declaration.
Leave Travel Concession (LTC)
Leave Travel Concession is generally provided to employees by employers for travel expenses within the country. An employee can declare the Leave Travel Concession only if it is included in his salary package provided by the employer.
Home Loans
You can declare the housing loan interest by providing your name and PAN card details. Apart from these, you must also provide the provisional interest certificate as proof, which can be generally issued from a bank.
Life Insurance Premiums
One must also provide details about the premium amount of their insurance policies. The premiums paid by you for life insurance policies are eligible for tax benefits under Section 80C of the Income Tax Act. You can claim this amount as the policyholder.
Wrapping Up
An Income Tax declaration is when you submit all your income information to the relevant tax authorities. The declaration includes all details about your gross income, profits, expenditures and investments. One must also provide a list of the deductions and exceptions they wish to apply for.
Form 12BB is the document available where you can list what you want to claim as a deduction from your taxes. For instance, if you purchase a life insurance policy for yourself, your spouse, or your children, you can qualify for a deduction under Section 80C for the premiums you pay for the policy.
