Investment Declaration Guide: Form 12BB Income Tax

What is Form 12BB?
 

Income tax Form 12BB is a statement of claims by an employee for deduction of tax. Salaried employees fill in the details of the investments and expenses made during a financial year. It has to be supported by essential investment documents to prove their declaration made in the form.

Usually, the Form 12BB has to be submitted during the end of a financial year. That's when you usually have the essential documents to back your declaration. The Form 12BB came into effect on 1st June 2016.¹

Apart from Form 12BB, salaried employees also have to submit a self-declaration to their employer at the start of a financial year. This declaration contains an individual's investment plans for the year. However, you may invest more or less than this declaration. To prove the final investments, Form 12BB and supporting documents have to be submitted by the end of the year, usually between December to January².
 

What declarations come under Form 12BB?¹
 

As discussed above, Form 12BB contains the investment and expense details of a salaried employee. Various sections of the Income Tax Act of 1961 provide tax benefits for these investments. So, you need to fill in the following details:

• HRA

  House rent allowance or HRA may or may not be a part of your CTC. So, before you file the form, make sure to check your salary details. If you are eligible for HRA and you live in a rented house, you can claim the same in Form 12BB. The details required are:

  • Amount paid

  • Name and address of the landlord

  • PAN of the landlord if annual rent exceeds ₹1 lakh

  • Rental agreement and rent receipts

    Note: If you are not eligible for HRA but you live in a rented home, you can claim the rent under Section 80GG of the Income Tax Act of 1961. For this claim, the rent has to be above ₹3,000. ¹

• LTA

  Leave travel allowance or LTA can be claimed if it's a part of your CTC. In a block of four years (current block: 2022-2025), you can claim LTA twice. You need to present the following documents to claim LTA:

  • Travel receipts of flight, train, bus, taxi, etc.

  • Travel agent invoices

    Note: LTA can be claimed only for your dependents and domestic travel. International trips and accommodation expenses are not covered.

• Home loan interests

  Under Section 24 of the Income Tax Act of 1961, you can claim home interest paid in a financial year. If you have borrowed a home loan for rebuilding, repairing, building, buying, or renovating your home, the home loan interest can be claimed. The documents required are:

  • Name, address, and PAN of the lender

  • Proof of interest paid

• Section 80C, 80CCC, 80CCD

  VI-A of the Income Tax Act of 1961 covers various sections like 80C (investments), 80D (health insurance), and 80G (donations). You can claim the following deductions:

  • Public provident fund

  • ELSS mutual funds

  • Life insurance policy

  • Tax-saving FDS

  • National Savings Certificate (NSC)

  • Children's tuition fees

  • Post office term deposit

  • Preventive health check-ups

  • Medical expenses (handicapped dependents)

  • Higher education loan interest

  • Section 80U for disability claim

  • Donations made.
     

FAQ
 

1. What is the purpose of Form 12BB?¹

   An employee makes an investment declaration at the start of a financial year. To support these investments and prove them, Form 12BB has to be submitted at the end of the Financial Year. Based on the investments proved in Form 12BB, employees can avail tax benefits. Documentary evidence needs to be provided at the end of the financial year as well. Based on the investment declaration, the employer can deduct the TDS.

2. Who needs to file Form 12BB?¹

   Salaried employees must file Form 12BB. Pensioners also have to file the form as pensions are deferred salaries.

3. Where do I have to submit Form 12BB?¹

   The Form 12BB has to be submitted to the employer at the end of the financial year. You can download and print the form from the official income tax website. After filling in the same, you need to submit it to your employer.

4. What if I fail to submit a declaration and my employer deducts excess tax?

   In case you delay the submission of the declaration and excess tax gets deducted, you can claim a refund by filing the income tax returns

You need to present supporting documents for each claim made under the VI-A chapter of the Income Tax Act of 1961.¹
 

Conclusion
 

Form 12BB is an essential document for salaried employees. To lower your tax liability and increase your net salary, it is essential to submit a declaration and Form 12BB on time. You can easily download the Form 12BB online and submit it to your employer’s HR portal¹. In case you delay submission or excess tax gets deducted, you can claim the amount in the income tax return. Now that you know how to fill out Form 12BB, maximise your tax benefit for the year with the timely submission of investment declaration forms.

Reference: