People particularly the salaried ones who are required to pay tax ahead of time otherwise called tax deducted at source (TDS) are expected to submit investment statements by the business toward the beginning of the budgetary year. Such investment disclosures qualified for deduction can reduce your taxation rate as TDS will be deducted on balanced taxable salary. Form 12BB is a part of the investment affirmation and confirmation compliance process.
What is Form 12BB?
12BB is basically ” an announcement of claims made by any service person for tax reduction purposes.” One can proclaim deduction qualified genuine investments made or any such expenditure on which tax return is given. Form 12BB is documented toward the end of the financial year.
It should be filed alongside legitimate verification of investments or costs on which you are asserting tax reductions and it is pertinent to every salaried citizen.
Is it mandatory to file Form 12BB?
With effect from 1st June 2016, each salaried citizen is mandatorily instructed to file Form 12BB to their employer to profit tax reductions on explicit investments and expenses. Likewise, filing supporting written proof alongside the Form 12BB is an obligatory necessity.
What statements would I be able to make in Form 12BB?
You can proclaim following tax-deductible pay segments alongside supporting testimony (where pertinent) while filing Form 12BB:
- Housing Rent Allowance (HRA)
In the initial segment of Form 12BB, you can give details to guarantee the assessment derivation on Housing Rent Allowance (HRA). To claim HRA, you have to submit the accompanying subtleties:
- Rent receipts alongside name and address of the landowner.
- PAN of the landowner (if the lease paid is more than Rs.1 lakh every year)
- Leave Travel Allowance (LTA)
The worker can likewise proclaim LTA for tax exclusion purposes. Section 10 (5) of the Income Tax Act, 1961 gives tax exception benefits on the LTA received by a worker. In any case, it ought to be kept in the mind that tax breaks on LTA can be claimed for travel within the country just and that too just up to 2 times in a block of 4 years.
- Interest on Home Loan
The employee can profit tax derivation benefits on his or her home loan under section 80C (principle reimbursed) and section 24 (home loan interest payment) when documenting form 12BB. You can likewise slot in registration expenses, stamp obligation and broker charges for tax findings under different relevant segments.
Important points need to be known before filling form 12BB
- Plan your investments well ahead of time: Income tax disclosure is made toward the beginning of the year and their evidence is submitted towards the year’s end. By and large, professionals will, in general, proclaim more investment toward the start. It lessens their TDS obligation extensively. Later on, they do not contribute appropriately to the year’s end. And thus, when they submit proofs their income charge risk multiplies impressively.
- Maintain records of verifications submitted: Always keep copies of evidence submitted to an employer or company as it is not feasible for you to recollect every one of the confirmations submitted for quite a while. The income tax office can request proofs at the time of the investigation. In this way, it is fitting to protect every one of the confirmations with you for an extensive timeframe.
- Avoid submitting forged investment proofs: You will be accountable and responsible for wrong data. The business is in charge of deducting incorrect TDS however he or she is not responsible for any ingenuine evidence.
- Submit verifications before due date: Always dodge a minute ago surge. Every taxpayer needs to submit bills of different stipends to guarantee tax cuts. In this way, there is a high probability that you will in general commit errors in submitting proofs. It is recommended to present the same accurately and conveniently in order to keep away from any erroneous conclusion in TDS deduction to avoid the critical situation.
- If switched jobs amid the year: If you have switched jobs within a particular year at that point do not claim the maximum benefit of the deductions at both the old and new company, generally your TDS reasoning would not be right and at last at the time of filing your Income Tax Return you should pay tax to the Income Tax Department with relevant reformatory interest for late tax payment.
- Pronounce future investment: Every Year by January or February, companies and government organisations request for submission of evidence. Nonetheless, there is a probability that employee may make some more investment till March end.
- Pronounce investments in advance: Disclose every one of your ventures and salary to your company heretofore to maintain a strategic distance from payment of interest u/s 234B and 234C for non-payment or short payment of assessments at the time of documenting your annual tax return. Additionally, you do not have to surrender any personal tax evidence with your income tax return.
What is Form 26AS?
The form 26AS is generated for every tax payer by the income tax department. The officials of the income tax department includes the TDS, TCS, self-assessment tax and refund details of the tax payer in the form.