Form 12B - Types, Importance & Steps to File

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Form 12B - Types, Importance & Steps to File

Are you planning to leave your current job and join a new company? If you want to take this step in the middle of a financial year, then learning about Form 12B is necessary. It is an important document that informs the new employer about your income and tax deductions under previous employment. Filling out this form can help you file income tax returns without hassles.

This article delves into what is Form 12B, its importance and how to file it. Let's begin!

What is Form 12B?

Form 12B is an income tax document that contains information about your income and tax deductions under previous employment. You must complete it as per the rules of the Income Tax Act, 1961 while switching jobs during a financial year. It helps the new employer assess your tax liability and deduct the correct tax from your salary.

Form 12B example: Suppose you join a new company in October 2023. In this case, Form 12B, with complete details for the period between April 01 2023 and September 30 2023, must be furnished. Here’s what Form 12B contains:

Details about the previous employer like Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), etc.

  • Your name, address and PAN

  • Your residential status

  • Duration of employment

  • Breakup of salary structure from previous employer, including basic pay, bonuses, allowances, perquisites, leave encashment and other salary components.

  • Tax Deducted at Source (TDS) on the salary.

  • Deductions on provident fund and rent-free accommodation, if any

  • Other income tax deductions under various sections of the Income Tax Act like 80C, 80D, 80E, 80G, etc.

  • Professional tax, if any

  • Your signature and verification

Why is Form 12B Important?

Form 12B is significant for both the employer and the employee for the following reasons:

Significance for the employer

Form 12B provides information about your salary and deductions from the previous employer. This helps the new employer deduct the correct TDS from your annual gross pay and generate Form 16 at the end of the financial year. Form 12B thus helps an employer ensure that a new employee adheres to the income tax laws

Significance for the employee

When you submit Form 12B to the new employer, you can ensure the right TDS deduction from your salary for the remaining financial year. This helps in minimising discrepancies in tax calculations. Filling Form 12B accurately further helps avoid penalties arising from incorrect tax details.

How to Fill Form 12B?

Filling Form 12B accurately is necessary to avoid any issues later. Now that you are familiar with what Form 12B is all about, here are the points you must complete while filling it out:**

Step 1: Fill in your previous organisation’s name and address.

Step 2: Enter your previous organisation’s PAN and TAN (these are given on your salary slips).

Step 3: Provide the duration of employment and total earnings in the financial year before joining the new company.

Step 4: Fill in the breakdown of the previous salary structure.

Step 5: Fill in the amount that went towards the provident fund and deductions on rent-free accommodations.

Step 6: Mention the investments and expenses eligible for deductions under various sections of the Income Tax Act 1961.

Step 7: Fill in the total TDS during the financial year.

  • Form 12B consists of two parts. The first one includes details about rent-free accommodation including furnished and unfurnished accommodations. The second annexure requires information about conveyance allowance or other similar allowances offered by the previous employer.

  • Before submitting your taxes, it is wise to review a form 12B filled example for reference and to ensure accuracy.

Note: The above information must be provided based on the Form 16 and salary slips issued by your previous employer

Wrapping Up

Form 12B income tax ensures correct TDS deductions when you switch jobs in between a financial year. You are required to submit it along with proof of investments by March 31. It helps the new employer know about your previous income and tax deductions. Based on the details provided by you, your new employer will issue a consolidated Form 16 at the year's end. Make sure you fill out Form 12B to avoid the hassle of self-computation of taxes to file an income tax return.

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What is Form 12BA?

What is Form 12BA?


Form 12BA is an income tax document that provides information about perquisites offered by the employer. It contains details about rent free accommodation, travelling expenses and other fringe benefits provided to an employee. It must be submitted with Form 16.

Who provides Form 12B?


Employees joining a new company in the middle of a financial year must provide Form 12B to the new employer. Employees can carry out Form 12B download from the official website of the Income Tax Department. Many organisations provide it to their employees.

What if I don't fill Form 12B?


If you don't fill out Form 12 B, you may not be able to file your taxes accurately, which can lead to incorrect tax returns.

What is the investment declaration form?


Employees have to declare their investments made during a year through the salary declaration form or investment declaration form (Form 12BB) to help you claim tax benefits or rebates.