Latest Update: An employee who wants to lower the tax deducted from salary and hike the take-home pay can use Form 12BAA to inform the employer about taxes deducted from any other source of income or taxes paid while making expenses. Form 12BAA is similar to Form 12BB, which the employee uses to make an investment declaration to the employer so that TDS on salary is deducted accordingly. Read more here.
Form 12BB is a declaration that salaried employees must provide to their employers to claim tax deductions and exemptions on their salary income. This form captures details of investments, expenses, and allowances that are eligible for tax benefits. Employers use the information in Form 12BB to calculate the correct amount of tax to be deducted from an employee’s salary.
This form is mandatory for all salaried taxpayers and must be submitted by the end of the financial year. Employees are required to declare the investments and expenses they have incurred during the year through this form. Additionally, they must provide supporting documents or proof of these investments and expenses at the conclusion of the financial year.
Here are the steps given to download Form 12BB:
- Click on highlighted texts to Download Form 12BB
- Click the download button to get Form 12BB, print it, and fill in all the necessary details, as explained later in this guide.
Want to increase your take-home salary or maximize your tax saving? Generate Form 12BB online via tax2win, fill-up and submit it to your employer along with other proofs to declare investments, interest paid against Home Loan, House Rent Allowance, Leave Travel Allowance, and other tax saving deductions. Generate Form 12BB with Tax2win
Personal Details
This is the first section of Form 12BB. Individuals must provide the following information:
- Full Name
- Address
- PAN (Permanent Account Number) or Aadhaar Number
- Financial Year
House Rent Allowance (HRA)
If an individual receives HRA, they can claim tax exemption by submitting:
- Amount of rent paid to the landlord
- Name and address of the landlord
- PAN of the landlord (if the total rent paid exceeds Rs. 1 lakh)
- Monthly rent receipts or rental agreements as proof
Key Points to Remember for HRA Tax Exemption:
- If HRA is not part of the salary, individuals can claim a similar deduction under Section 80GG for living in a rented house.
- Rent receipts are required only if the monthly rent exceeds Rs. 3,000.
- HRA exemption cannot be claimed if the individual resides in their own house.
- If rent is paid to parents, it should be reported as part of their income in the Income Tax Return.
- Submitting fake rent receipts is illegal and can lead to penalties.
- A formal rent agreement on stamp paper is recommended for authenticity.
Leave Travel Allowance (LTA)
To claim LTA benefits, employees must provide travel proof such as boarding passes, flight tickets, or travel agent invoices. The exemption applies only to travel costs up to the amount specified in the CTC. The exempt amounts are as follows:
| Travel Mode |
Exempt Amount |
| Air |
Economy class airfare on the national carrier (shortest route or actual cost, whichever is lower) |
| Rail |
First-class AC rail fare (shortest route or actual cost, whichever is lower) |
| Bus |
First-class or deluxe bus fare (shortest route or actual cost, whichever is lower) |
| Unrecognized public transport |
First-class AC rail fare (shortest route or actual cost, whichever is lower) |
Points to be Remembered for LTA Tax Exemption:
- LTA can only be claimed if explicitly included in the CTC.
- Claims can be made for the individual, spouse, children, dependent parents, and dependent siblings.
- LTA can be claimed twice within a block of four years (current block: 2022–2025).
- Unused LTA from the previous block can be carried forward but must be used in the first year of the next block.
- LTA covers only domestic travel and excludes accommodation expenses.
Deduction of Interest on Home Loan
Interest on home loans is deductible under Section 24 of the Income Tax Act. Individuals can claim deductions for loans taken for the construction, purchase, repair, or renovation of a house. The following details must be provided:
- Interest paid during the fiscal year
- Name and address of the lender
- PAN or Aadhaar number of the lender
- Whether the lender is a financial institution or an employer
- Proof such as EMI statements, possession/construction completion certificates, or a self-declaration of occupancy
Tax Benefits on Home Loans:
-
Self-Occupied Property (SOP):
- Maximum interest deduction: Rs. 2,00,000 for purchase or construction.
- Reduced to Rs. 30,000 for repair or reconstruction.
- Construction/purchase must be completed within five years from the loan sanction year.
-
Rented Property (LOP):
- The entire interest paid is deductible from rental income.
-
Principal Repayment:
- Deduction up to Rs. 1.5 lakh under Section 80C for both SOP and LOP.
Additional Deductions:
- Section 80EE: First-time homebuyers can claim up to Rs. 50,000 if the loan amount does not exceed Rs. 35 lakhs and the property value is under Rs. 50 lakhs.
- Section 80EEA: First-time homebuyers can claim up to Rs. 1,50,000 if the property value does not exceed Rs. 45 lakhs and the loan is sanctioned between April 1 and March 31.
Key Points to Remember for Home Loan Tax Exemption:
- For joint loans, interest deductions can be claimed proportionately.
- Interest paid to non-banking sources (e.g., friends and relatives) is deductible under Section 24 with proper proof.
- Principal repayment from non-banking sources is not eligible under Section 80C.
Deductions Under Chapter VI-A
The final section of Form 12BB covers deductions under Section 80 of the Income Tax Act. Key deductions include:
| Sections |
Investment Class |
| 80C |
Exemption up to Rs. 1.5 lakhs (PF, PPF, LIC, NSC, ELSS, tuition fees, etc.) |
| 80CCC |
LIC pension plans and other insurers |
| 80CCD |
Contributions to NPS Tier-I account |
| 80D |
Health insurance premiums (higher limits for seniors) |
| 80DD |
Expenses for treating physically challenged dependents |
| 80E |
Interest on education loans (deductible for 8 years) |
| 80G |
Donations to approved organizations |
| 80GG |
Rent payments without HRA |
| 80GGA |
Donations for scientific research and rural development |
| 80GGC |
Non-cash contributions to political parties |
| 80TTA |
Savings bank interest (up to Rs. 10,000) |
| 80U |
Rebate for disabled individuals (up to Rs. 1.25 lakhs) |
Verification
The last part of Form 12BB is the verification section, where the individual confirms the accuracy of the details provided. To complete this section, the individual must:
- Enter their name and the name of either their father or mother.
- Specify the city where the form is being filled out.
- Provide the filing date.
- Sign the form to validate the information submitted.
FY 2024-25 is about to end and it is the time to provide information on your tax investments to reduce your tax liability. Form 12BB is a document that needs to be submitted by an employee to their employer for the purpose of claiming tax deductions and exemptions on their salary income. Act before March 31, start your tax planning with tax2win tax experts. Book a consultation with our Online CAs now!
