Income Tax Form 12b: Everything you need to know

Ramesh had been working in the same IT firm for the past 3 years. Owing to his stellar performance, he received an offer from another, bigger firm last year. He took it happily as he got an impressive hike and a job profile he always wanted. The transition from his previous firm to his new one was rather smooth. However, at the end of the financial year, he received a shock in the form of a huge tax liability. He couldn’t deduce how both his employers had been deducting tax from his salary all year round. He had no option but to pay the amount.

Here’s how it had happened. Let’s say Ramesh’s salary at the previous firm, which he left on the 30th of June, was Rs.68000 and his tax deductions under Section 80C were Rs.55000. He joined the new firm on the 1st of July and his salary is Rs.92000. His final investments deductible under Section 80C are Rs.90000.

This is how his tax should ideally have been calculated.

 

However, this is how it was actually calculated by his new firm.

 

 

*The example is just for illustration. Actual calculations also take into account cess and other factors.

 

His final tax liability became Rs. 50900 instead of Rs.15575. In the absence of Ramesh providing tax details from his last firm, the new firm recalculated the exemption limit and deductions. This led to double counting and a rather huge tax payable at the end of the financial year.

In case you find yourself stuck in a situation like Ramesh’s, your financial planning might have gone haywire and you might need help with certain personal expenses. At such a time, you can turn to an instant personal loan option like Bajaj Finserv Hybrid Flexi Personal Loan, available on Bajaj Markets. It provides the facilities of flexible repayment tenure, unlimited withdrawals. No tedious paperwork is involved and no collateral is required for availing the loan.

Ramesh could have been any of you, had you not furnished Form 12B under Income Tax Act. When you switch jobs, you need to ask your previous employer for Form 12B under Income Tax Act. You can also download it yourself, fill it based on your salary slips, and submit it to your new employer.

 

 

What is Form 12B?

Form 12B comprises details of your earlier salary, TDS (Tax Deducted at Source), perquisites paid, etc. Along with this form, you also have to submit proofs of all investments you have made before 31st March to your new employer. At the closing of the financial year, they will give you your consolidated Form 16. If you do not submit Form 12B, you will end up receiving Form 16 twice and will have to consolidate the two yourself.

What does Form 12B under Income Tax Act include?

• TAN and PAN of previous company
• Breakup of previous salary
• TDS deducted by previous employer
• Professional tax deductions
• EPF deductions
• Deductions for accommodation expenses
• Other deductions like those under Sections 80c, 80D, 80E, and Section 24.

What is Form 12BA?

It is a statement issued by your employer listing details about perquisites. These include perquisites like loans. Form 12BA can be downloaded from the official website of Income Tax Department of India, and submitted to your new employer.

What if you haven’t been given any perquisites?

If you haven’t received any perquisites, you should still ask for your Form 12BA. Your employer can thus mention in Form 12B that you haven’t received any perquisites.

Receiving loans from your employer is very convenient, but, unfortunately, everyone does not have this perquisite. If your employer does not offer this prevision, don’t fret, we’ve got you covered. You can check out various types of loans available on Bajaj Markets. For instance you can avail personal loans of Rs. 25 lakhs for a variety of needs, like education, travel or even marriage! They come with a host of advantages like speedy approval, speedy disbursal, and zero collateral. The loan application process can be completed in a few quick, simple steps which require minimal documentation and are completely hassle-free.

Can my new employer refuse to deduct TDS on my previous salary?

It is obligatory for your new employer to deduct tax on your consolidated income after taking into consideration deductions from your previous employer.

Income Tax laws and procedures are quite confusing and it may seem like a daunting task to go through them. But if you do not pay attention to details like these on time, you will have to face unnecessary trouble at the time of filing taxes. Make sure you have all your documentation in order at the correct time and save yourself from the stress of dealing with corrections at the end of the financial year.

Post Submission of Form 12B

On submitting the Form 12B income tax with accurate details, the new employer will provide you with a Consolidated Form 16 at year-end, depending upon the details provided by the new employee in Form 12B.

Who shall issue Form 12BA and when?

Employers issue Form 12BA along with Form 16 to the employee on 15th June of the immediately following financial year.

Difference Between Form 12B and Form 12BA

Most of the time people confuse 12B with Form 12BA. The basic difference between form 12B and Form BA is mentioned below:

• You would require Form 12B in case you happen to change your job in the middle of a financial year. In Form 12B, you will have to provide your previous employment details such as income, TDS deducted, etc. and submit it to your new employer. On the other hand, Form 12BA gives a detailed statement of fringe benefits, profits, perquisites etc.
• To sum it up, Form 12B is a statement to be provided by the employee to his new employer if he/she is joining in the middle of a financial year. Whereas, Form 12BA is a statement of perquisites, which is to be provided by the employer to the employee.

You can also read about tax benefits on personal loan.

Bajaj Markets, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Bajaj Markets, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Bajaj Markets App.