Form 12B – How to Fill the Form, Types, and Importance
Form 12B
Form 12B is an IT (income tax) form or statement that an employee must submit (as per Rule 26A) while joining a new organisation. The form consists of details pertaining to the salary received by an employee and the tax deducted at source (TDS) from his/her previous employer(s) during the financial year, i.e., 1 April to 31 March. The new employer uses this information to calculate the employee’s tax liability for the current financial year and deduct TDS accordingly. The form contains details such as the name and address of the previous employer(s), period of employment, salary earned, allowances, perquisites, and TDS deducted.
Did You Know
Form 12B is a part of the Income Tax Act and is mandatory for every employee to fill and submit to the new employer.
Form 12B Sample
This is how Form 12B of Income Tax looks:
Components of Form 12B
The following are the components of Form 12B:
- Details of the previous employer, such as Permanent Account Number (PAN) and Tax Account Number (TAN), and so on
- Breakdown of the previous salary in detail that includes basic salary, dearness allowance (DA), leave travel allowance (LTA), house rent allowance, prerequisites, leave encashment, etc.
- Tax Deducted at Source (TDS) from the last salary was withdrawn
- Deduction for Employee Provident Fund contributions
- Professional tax paid by the employee, if any
- Deduction with respect to rent-free accommodation
- Any deduction under certain sections of the Income Tax Act, such as Sections 80C, 80D, 80E, 80G, etc.
You need to furnish this information for the time he/she was associated with his/her previous employer. For example, if you join a new organisation in November 2023, you will have to submit this form to the new organisation for the period between April 2023 and October 2023.
How to Fill Form 12B?
Here’s how you can fill Form 12B of Income Tax:
- Name and address of the previous company
- Duration of employment
- Details such as the TAN and PAN of the last company
- Income that you earned during the financial year before joining the new organisation
- The amount of Provident Fund that was credited, if any.
- Deduction available for life insurance premium payment and any other expenditure under Section 80C of the Income Tax Act 1961
- Breakdown of salary such as dearness allowance (DA), house rent allowance (HRA), leave encashment, etc.
- Total tax deduction during the financial year
There are two parts to the form. The first part includes information about the employers’ provision of rent-free accommodation. In addition, you will have to provide details about furnished and unfurnished accommodation along with furnishing specifications.
The second annexure requires information from the previous employer, such as conveyance allowance, etc.
When Should Form 12B be Submitted?
As per Rule 26A, any employee in India must submit Form 12B while joining a new organisation. This is mandatory for every salaried employee working in India.
Importance of Form 12B
The importance of form 12B of Income Tax for new employers and employees has been discussed below:
1. For Employers
This form provides details about the new employee’s previous salary and deductions. It helps deduct accurate TDS on employees’ income for the financial year. This form further helps employers to generate Form 16 with correct details so that no issues occur later.
2. For Employees
If you submit Form 12B of Income Tax to the new employer, you will no longer have to worry about TDS deduction. As you have submitted the details, there will be no chance of any discrepancies.
What Happens After the Form 12B is Submitted by an Employee?
Once an employee submits Form 12B to the new employer, the following actions are usually taken:
1. Verification
The new employer will verify the details provided in Form 12B with the previous employer to ensure the accuracy of the information.
2. Tax Deduction
Based on the information provided in Form 12B, the new employer will determine the tax liability of the employee and deduct tax at source (TDS) accordingly.
3. Form 16 Issuance
Once the tax is deducted, the employer will issue Form 16 to the employee, which shows the amount of salary earned and tax deducted during the financial year.
Final Word
If you join a new organisation in the middle of a financial year, you must submit Form 12B as per Rule 26A of the Income Tax Act 1961. It is a useful financial document for employers since it contains information about a new employee’s previous salary and deductions.
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FAQs
Yes, it is the responsibility of the employer to deduct the TDS applicable on the employee’s consolidated income. After adjusting the TDS that the previous employer deducted, the new employer will deduct TDS.
You can get Form 12B from the Income Tax Department’s official website. The form will be available in PDF format. You need to take a printout, fill out all the necessary details, and submit it to your new employer.
A person’s status regarding how long they have resided in India during the last five years is referred to as the residential status. A taxpayer’s residency status during the financial year and four years before it determines the income tax burden.
After the employee submits Form 12B, the new employer issues a consolidated form 16. The issuance of this form is done at the end of the financial year on the basis of information the new employee provides in form 12B. You must, however, verify the income details and TDS deduction of the forms issued by both the present and past employers.
Yes, it is mandatory for the employer to issue form 12BA even if an employee does not receive any prerequisites. Employers must mention in form 12B that no perks have been given to the respective employee.
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