1

Details of Employee

2

House Rent Allowance


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3

Leave Travel Concessions

For example: Flight Ticket, Railway Ticket, etc

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4

Interest on Home Loan

Interest Certificate from Bank​ ​/​ ​​Yearly ​Home Loan statement
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5

Deductions Under Chapter VI - A

1. Deductions under Sec 80C
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2. Other Deductions
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What is Form-12 BB?

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. This form contains details of various investments, expenses, and allowances that are eligible for tax benefits. The employer uses this form to calculate the correct amount of tax to be deducted from the employee's salary.

Generally, you fill out a form 12BB when you start a new job or at the beginning of the financial year. However, at the year's end, you are supposed to submit the actual proofs/evidence against the tax exemptions, investments, and expenses already claimed by you in the form 12BB.

Previously there was no standard format for declaring your tax-deductible expenses and investments. With effect from 1st June 2016, the Income tax department has introduced a standard format of Form 12BB.


Form 12BB contains the following information:

  • Name and address of the employee
  • PAN number of the employee
  • Details of House Rent Allowance (HRA) received
  • Declaration of the amount of rent paid if HRA is received
  • Details of Leave Travel Allowance (LTA) claimed
  • Declaration of investments made under various tax-saving schemes such as Public Provident Fund (PPF), Equity Linked Saving Scheme (ELSS), National Pension System (NPS), etc.
  • Declaration of the amount of interest paid on a home loan, if any.
  • Any other exemptions and deductions applicable

You can download the sample Form 12BB from the Income Tax Department website.

form 12BB
Download Form 12BB here.

How to fill Form 12BB?

Filling out tax forms can be a nightmare for many of us. However, filing Form 12BB isn’t as scary as it might look. So, let’s just get down with it!

Just follow these instructions to understand and fill out the complete form to claim the maximum tax benefit. Now Let's Discuss each part one by one in detail:

I. Personal Details:

This is the first section of Form 12BB, you need to mention your:

  • Full Name
  • Address
  • Permanent Account Number/Aadhar Number
  • Financial year (Current Financial Year is F.Y. 2023)

II. HRA(House Rent Allowance):

HRA(House Rent Allowance)

To claim HRA tax exemption, you need to submit the following details to your employer -

  • Amount of Rent paid
  • Name of your landlord
  • Address of your landlord
  • PAN No of your landlord in case the total amount of rent paid during the year exceeds Rs.1 lakh.

In addition, you must also submit proof for claiming an HRA tax exemption.

1. Evidence/Proof for claiming House Rent Allowance tax exemption:

The proof for claiming HRA tax exemption is the monthly rent receipts. In many organizations, employers also ask for a rent agreement to allow HRA tax exemption.

2. Amount of tax saving on House Rent Allowance(HRA):

This is the best tax saving avenue. Calculate your HRA tax exemption with our free HRA exemption calculator tool.

Read our complete guide on rent receipts to know in detail how you can claim HRA tax exemption to save maximum tax

3. Things to remember when claiming HRA tax exemption:
  • You can claim HRA tax exemption only when HRA is a part of your CTC.
  • In case HRA is not part of your CTC, and you are living in a rented house, you can claim tax benefits under section 80GG.
  • A rent receipt is required only when your monthly rent exceeds Rs. 3,000.
  • You can’t claim HRA if you are living in your own house.
  • If you are paying rent to your parents, ask them to show it as their income when filing their Income Tax Return.
  • Never submit fake rent receipts; this might land you in big trouble with the income tax authorities.
  • Even if your employer does not ask for a rent agreement, it is advisable to have a formal rent agreement printed on Rs. 500 stamp paper or as per the rate prevailing in your state for records.

III. LTA(Leave Travel Concession/Allowance):

This allowance is the only allowance that helps save tax only when you take a holiday.

1. Evidence/Proof for claiming LTA tax exemption:

Employees need to submit travel bills like boarding passes, flight tickets, invoices from travel agents, boarding passes, etc., to the employer.

2. Amount of tax saving on LTA:

This tax exemption is allowed only on actual travel costs to the extent specified in CTC. The fare is exempt as per the following conditions:

Travel Mode Exempt Amount
Air Airfare of economy class in the National Carrier (Indian airlines or Air India) by the shortest route or the amount spent, whichever is less
Rail Air-conditioned first class rail fare by the shortest route or the amount spent, whichever is less
Bus First Class or deluxe class fare by the shortest route or the amount spent, whichever is less
Unrecognised public transport system Air conditioned first class rail fare by shortest route or the amount spent, whichever is less
3. Things to remember when claiming LTA tax exemption:
  • You can claim LTA only when it is a part of your CTC.
  • You can claim LTA for yourself, your spouse, children, dependent parents, and dependent brother and sister.
  • It can be claimed twice in a block of four years. The current block is 2022-2025.
  • If you have claimed only 1 LTA in the previous block of 4 years, you can carry forward and utilize the 2nd LTA but have to claim it in the first calendar year itself of the next block.
  • It is allowed for domestic travel and not for international travel. Also, no benefit is allowed for the accommodation expenses.

IV. Deduction of Interest on Borrowing:

Deduction of interest on borrowings on a home loan is allowed under section 24 of the income tax laws. You can claim a deduction for interest on your home loan taken for construction, reconstruction, repair, purchase, or renovation.

The information that needs to be filled in Form 12BB is

  • Interest Payable/paid to the lender during the financial year
  • Name of the lender from whom the loan is taken
  • Address of the lender
  • PAN of the lender/Aadhar Number: Financial Institutions/Employer/Others, from whoever the loan is taken
PAN of the lender
1. Evidence/Proof for Claiming tax exemption for interest on borrowing:

Documents required to claim deduction u/s 24B on interest payment of home loan are:

  • Statement / Certificate stating total EMI paid along with Interest and Principal components.
  • Possession/construction completion certificate
  • Self-declaration from the employee whether the house is self-occupied or let out.
2. Amount of saving on Home Loan:
a. Tax benefits on payment of interest:

If you are paying interest on a home loan, then the quantum of deduction will depend on the type of house property. Let’s discuss the same in detail.

Tip: Claiming deduction on interest payment shall result in a loss under head house property. This loss can be adjusted against income from other heads in the current year, subject to the limit of Rs. 2 lakh.

I. Tax benefit in case you have self-occupied property (SOP):

Maximum interest of Rs. 2 00, 000 is allowable in case a loan is taken for the purchase or construction of your house. Such benefit shall be reduced to Rs. 30, 000 in case a loan is taken for repair/ reconstruction. Further, construction or purchase must be completed within 5 years from the end of F.Y. in which the loan is taken.

II. Tax benefits in case you have rented out(let out) the property (LOP):

The entire interest amount that you pay towards the loan is available as a deduction in case of the rented property. Such amount shall be deducted from the rental income for the year

Note : However, from 1 April 2017 onwards, i.e., F.Y. 2017-18, the maximum tax exemption of Rs.200,000/- can be taken for all types of houses(let-out/self-occupied). In case of let out a property, you have paid more than Rs.2,00,000 as interest on a home loan taken for construction/purchase, then the remaining amount shall be allowed to be carried forward for set-off in subsequent years.

b. Tax benefits on repayment of Principal Amount:

In both cases, whether there is self-occupied or rented property, principal amount repayment is eligible to be claimed under Sec 80C of the income tax act. A maximum of Rs. 1.5 lakh can be claimed under Sec. 80C for the principal amount.(Max. limit of claiming all deductions under 80c is 1.5 lakh. So, plan accordingly.)

3. Additional deduction under Section 80EE

A maximum of up to Rs. 50,000 additional deductions is allowed for first-time buyers under this section. Section 80EE is valid for loans sanctioned till 31st March 2017 only. To claim the home loan tax benefit under this section, the following conditions need to be met:-

  • The loan should be less than or equal to Rs.35 lakhs. Also, the property’s value should not exceed Rs. 50 lakh.
  • On the date the loan is sanctioned, the individual should be a first-time house owner.
4. Additional deduction under Section 80EEA

An additional deduction was made for home buyers for a maximum of up to Rs. 1,50,000 under Section 80 EEA.
To claim the tax benefits under a home loan, the following conditions should be met:-

  • The individual should be a first-time home buyer on the date of loan sanction.
  • The individual claiming deduction under Section 80EEA is not eligible to claim the deductions under Section 80EE.
  • Stamp duty value of the property does not exceed Rs 45 lakhs.
  • Loan must be sanctioned between 1st April 2019 to 31st March 2022.
5. Things to remember when claiming Interest on Home Loan tax exemption:
  • In case, you have taken a home loan jointly, then you can claim the benefit of the interest deduction proportionately.
  • If you have taken a home loan from a lender other than your bank, i.e., your friends, relatives, or any money lender the interest payment can be claimed as a deduction under section 24.Provided you take a certificate of interest from the person to whom you had paid interest.
  • Where a loan is taken from your friends, relatives, or any money lender i.e., other than banks, the principal repayment is not eligible for deduction under section 80C.

This part of the form may take longer to finish if you claim maximum tax benefits. If you do not have any deductions to make, you can then move on to the last section.

6. Deductions under Chapter VI-A

Deductions under Chapter VI-A

Chapter VI-A covers income tax deduction under various sections like 80C, 80D (Medical insurance) 80G (Donation) etc. To claim deduction, evidence of investment made or expenditure incurred is required. You might be wondering what kind of proof is required to be submitted to claim these deductions. Don’t Worry, we are here to help you.

7. Verification

Verification

The last section of Form 12BB is the “verification” of the information submitted in Form 12BB. You need to just enter your name along with the name of your father/mother and the place(the city in which you are filling the form) and date of filing the form and then sign the form.

"To avoid tax deduction altogether, you’ll declare investments to reduce your income to the basic exemption limit so that no taxes are leviable and no TDS deduction is required."

Is it compulsory to fill out Form 12 BB for every salaried individual?

From June 1, 2016, it became mandatory for every salaried individual to submit Form 12BB to their employer for claiming tax deductions and exemptions. This form helps the employer to compute the correct amount of tax to be deducted from the employee's salary.

By submitting Form 12BB, an employee can ensure that they claim the maximum tax benefits of deductions and other tax exemptions that they are eligible for. This can help reduce their overall tax liability and increase their take-home pay.

Is Form 16 and Form 12 BB same?

Form 16 contains the detail of the entire salary breakup, tax deduction, and deposition details with the government. At the same time, Form 12 BB informs the employer about all the investments and expenses made by you. These are not the same.

What information is required to be filled in Form 12BB?

The details required to be reported in Form 12BB are:

  • Your Personal Details - Name, Address, PAN Aadhar Number, Position/Designation, Father’s Name
  • Financial Year - Current Financial year is F.Y. 2022-23
  • HRA: House Rent Allowance
  • Leave travel concessions or assistance
  • Interest on home loan
  • Income Tax Deductions under Chapter VI-A of Income Tax
  • Other Details like Date, Place, Signature, etc

Frequently Asked Questions

What is the purpose of Form 12BB?

The Income Tax law gives powers to your employer to give you the benefit of all the tax-deductible expenses and investments made by you during the year at the time of deducting your income tax from your monthly paycheck.

However, just one condition is there; this benefit is provided to only those employees who submit their declaration/proofs of income tax deductions in Form 12BB are eligible for this benefit. Thus, Employees must complete this form so that their employers can know how much income tax needs to be deducted from their monthly paycheck and, in turn, how much money they will take home with each paycheck.

“Here's Now that we have understood the importance of Form 12BB, let’s understand Form 12BB in a bit of detail.”

What is the format of Form 12BB?

The Income Tax Department has made a standard format of Form 12BB. It must be prepared per Rule 26C of the Income Tax Rules. You can download form 12BB online in pdf or Word format, print, fill and submit it to your employer along with the required proofs.
Alternatively, you can fill out Form 12BB online and either mail it to your HR directly or print, sign, and submit it to your employer along with necessary proofs


What are the things to be done before filling Form 12BB?

  • Study your CTC structure carefully to know whether HRA or LTA is a part of your package. You can claim these allowances only when your employer explicitly makes them a part of your CTC structure.
  • Go to your bank or download the interest certificate and loan repayment schedule of your home loan and bank account statement online.
  • Assemble all your receipts for all the income tax deductible expenses and investments done by you, like Rent receipts, LIC premium receipts, tuition fees receipts, donation receipts, etc.

How to Fill out Form 12BB when you change jobs?

If you have changed jobs during a particular year, then do not claim the maximum benefit of all the deductions with both employers; otherwise, your TDS deduction will not be correct, and ultimately, at the time of filing your Income Tax Return, you will have to end up with paying tax to the Income Tax Department with applicable penal interest for late payment of taxes.


What happens if you accidentally forget to provide Form 12BB to the employer?

In case you forgot to submit form 12BB to your employer within the prescribed time, the employer will not be able to give you the benefit of deductions and other tax exemptions. As a result, excess TDS will be deducted from your monthly salary. However, you can claim a refund of such excess TDS while filing your income tax return.


How to claim for perquisites that are not covered in Form 12BB?

Perquisites are claimed in Form 12BA and not Form 12BB. Form 12BA is a statement showing particulars of perquisites, other fringe benefits or amenities, and profits in lieu of salary with value thereof.


How to show the additional investments which I misses to declare in Form 12BB?

The additional investments which an individual had missed and not declared in Form 12BB can be claimed while filing the return. Although excess TDS will be deducted from his salary during the year, he can claim a refund of the same in his ITR.


I made the declaration in January for making investments in March But did not submit it to my employer. What are the consequences of declaring investments but not submitting the proofs?

If you have not submitted proof of some investments which you have declared in Form 12BB then those would not be considered by your employer. Resultantly, TDS would be calculated ignoring those proofless investments, and it will reduce your take-home salary.


After Form 12BB: Tips on Navigating Tax Season

Tax season can be a confusing and overwhelming time. With the number of different tax forms and sections, it’s difficult to keep track of them all. One way to ensure a stress-free tax season is by correctly filling out your form 12BB when you start a new job or at the beginning of the year. In addition, it’s a good idea to start your tax preparation early and stay on top of the process.

If you’re unsure whether you need to file your taxes, there’s an income threshold and some other conditions that help determine whether you should file or not. This threshold is determined by factors like age, earned income, and residential status.

If you’re struggling with income tax sections and provisions, do not worry. There are a lot of calculators out there to make the process clearer. You can use our income tax calculator to estimate the taxes you owe.

And keep in mind that there are tax changes every year, so this year’s tax season may be different than last year’s. If this is hard to track, you can always seek a CA for help.