mail-box-lead-generation

written by | September 7, 2022

What is Form 12B? Importance & How to Fill It

×

Table of Content


Form 12BB is also known as an 'Investment Declaration form.' Salaried employees utilise it to declare their Tax Saving Investments. Form 12BB ensures that TDS is accurately deducted from workers' wages.

Form 12B is mainly used to pay employees' salaries when they quit their positions and transfer to another company within the fiscal year; nevertheless, the new employer must be aware of specific details.

Section 192(2) of the Income Tax Act of 1961 covers the paperwork required to establish the tax liability of workers who change occupations during the fiscal year. This section includes information on previous employment compensation, bonuses, and tax withheld at source (TDS) for the fiscal year. 

Did You Know?

The main objective of Form 12B is to provide information about the individual's earnings from the prior organisation.

What Exactly is Form 12B?

It is essentially an income tax form submitted under Rule 26A standards. It is often presented by someone who has joined a new firm in the middle of the fiscal year.

Also read: Section 195 of Income Tax Act - Tds Under Section 195, Learn About the Rate of Tds Under Section 195

The primary goal is to offer information about an individual's earnings from their prior employer. It should be noted that a new employee must submit Form 12B to the new employer. Furthermore, the new employer must provide Form 12B to the new employee. However, one can begin online and then complete and send it, together with Form 16, to the new employer. However, submitting Form 12B may not be required in all circumstances.

Components of Form 12B

The form must be completed using salary slips given by prior businesses. The following are the critical components of Form 12B of Income Tax:

  • Information about former organisations like TAN and PAN. 
  • Details, such as gratuities, leave travel allowances, dearness allowances, and house rent allowances, give a thorough breakdown of the preceding pay.
  • TDS deductions from the prior employer's compensation.
  • Employees are always responsible for paying professional taxes.
  • Deductions may be taken under Sections 24(b), 80C, 80D, 80E, etc.
  • Deductions for provident fund contributions and rent-free housing.

Notably, if someone started working for a new organisation in August 2018, they must provide information about their prior earnings from April 1, 2018, to July 7, 2018.

The Significance of Form 12B

The main implications of Form 12B are covered here for both the new employer and the employee.

For Employers

Given that it provides information on the new employee's prior wage and deductions, it is helpful to the new company. In turn, it aids employers in producing Form 16 with accurate data.

For Employees

When they complete this Form, new employers can accurately take that amount from their pay and reduce the possibility of errors. When joining another organisation or association during the financial year, it is necessary to provide details of the money received from the previous organisation. 

Also read: 194O of income tax act - What Is the TDS on E-commerce Payments & Objective of Section 194O

Who Will Provide Form 12B?

Employees that start new employment during a fiscal year must submit their new employer with Form 12B. This form includes current salary, TDS taxes, and so forth. Form 12B must be completed by the employee, not the prior employer. The employee must complete Form 12B, and Form 16 should be attached if given by the preceding employer. Employers provide their employees with the consolidated form together with Form 16.

How to Fill Form 12B of Income Tax?

These instructions below explain how to complete Form 12B of Income Tax in a nutshell:

  • Give details like the last employer’s name and exact location.
  • Add details like the TAN and PAN of the latest association from previous pay.
  • Mention the business hour.
  • Include details like money earned during a particular, fiscal year before joining the current company.
  • Include details in Section 7, such as the dearness stipend, rent encashment, housing lease, etc.
  • The amount of Provident Fund (PF) credited to the record number in segment eight should now be entered.
  • Segments 6, 7, and 8 should be added together, and 9 should include the result.
  • Give details on deductions under Section 80C, such as extra security premium, PF, etc.
  • Enter the total amount of tax deducted during that fiscal year.

It is important to remember that Form 12B includes two pages of annexures. Giving specifics like the value of the business's lease-free convenience is preferable in the first part. Additionally, the details of empty and occupied spaces are intricate in terms of décor extras. The second annexure also addresses minor issues like transportation reimbursement, or the prior business offers comparative advantages.

Representatives who submit Form 12B receive a combined Form 16 from their new employer based on the specifics of the former. It is often advised to clarify the specifics related to revenue and TDS contained in forms provided by the long-term managers. In Form 16, the amount of Form 12B income tax deducted at the source must equal the amount referred to in the Form provided by the current business. This will aid in eliminating the risks associated with tax inequities.

What Separates Form 12B from Form 12BA?

Although Forms 12BA and 12B are used for different things, people frequently confuse them. In the table below, Form 12B and Form 12BA are contrasted.

Form 12B

Form 12BA

The 12B form is an assertion of income from compensation based on point-by-point articulation.

Formally speaking, 12BA is a list of benefits.

Employees provide Form 12B to their new employers to start the new job in a financial year based on insurance.

In contrast, managers provide form 12BA to their representatives together with form 16.

Form 12B covers intricacies such as revenue from compensation, TDS derivations, and other things based on the components.

Intricacies of incidental benefits, profits and perquisites, and other compensation income types are detailed on various side forms, such as 12BA.

Before changing jobs, people should make an effort to consider a few issues in addition to being familiar with Form 12B. For instance, accurately disclose their prior income to the new employer.

In addition, they must provide the specifics of any Section 80 deductions and any outstanding debts. Above all, if they had been deducting TDS from their wage, they should keep in mind to get Form 16 from their employer.

What separates Form 12B from Form 12BB?

  • Private individuals are required to file Form 12B, which includes information on the profits of the prior employer when they change occupations in the middle of the fiscal year.
  • Form 12BB, on the other hand, is submitted either on an anticipated basis at the start of the fiscal year or after you commence replacement work. You must, however, produce proofs or documentation at the end of the year to support any tax exemptions, investments, or costs you've previously listed on Form 12BB.
  • In addition to receiving a tax break when filing Form 12B, using an individual credit to pay rent or for a business endeavour might qualify you for a tax break.

Also read: What Is Section 206ab of Income Tax Act - How to Calculate Tds Under Section 206ab?

Conclusion

Individuals who join another organisation during the year must file Form 12B, according to Rule 26A. Form 12 B's income tax form contains information about a person's prior profits from previous firms. Form 12B must be completed by each new employee and sent to their new management. Forms 12B and 16 must be completed along with the disclosure if given by the prior employer. Form 12B equipment, on the other hand, is not necessary.

Form 12B is completed and returned to the company when an employee joins during the fiscal year. In the event an employee changes jobs during a financial year, Form 12B must be submitted to their new employer. 
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: How can I receive my former employer's Form 12B?

Ans:

You may get Form 12B from the Income Tax Department of India's website at incometaxindia.gov.in. It may be found in pdf format and must be printed, correctly filled out with all the necessary information, and then delivered to your current company.

Q: What does "residence status" mean on Form 12B?

Ans:

A person's position concerning how long they have resided in India during the previous five years is their residential status. A taxpayer's residency status during the tax year and the four years before the tax year determines their income tax burden.

Q: Who completes Form 12B?

Ans:

Income tax forms, such as Form 12B, must be submitted following the requirements of Rule 26A. It is provided by staff members who switch employers in the middle of a fiscal year. The main goal is to outline the employees' wages from their previous jobs.

Q: What occurs if Form 12B is not delivered?

Ans:

Your consolidated Form 16 will be provided to you at the end of the fiscal year. You will receive Form 16 twice if Form 12B is not submitted, and you must combine the two forms yourself.

Q: Is completing Form 12B required?

Ans:

Rule 26A of Form 12B of the Income Tax Act of 1961 must be followed when completing Form 12B. Giving information about the applicant's former employment earnings is the Form's main objective. It is an in-depth breakdown of pay income. There is no requirement to submit Form 12B.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
×
mail-box-lead-generation
Get Started
Access Tally data on Your Mobile
Error: Invalid Phone Number

Are you a licensed Tally user?

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.