Gone are the days when you would work in a company all your life. As per a survey conducted earlier this year, 60 percent of working professionals in India have changed jobs in the recent past. 56 percent of them are millennials who moved from one company to another in a short duration. It was also seen that 85 percent job hoppers did so just to add a new job to their resume, regardless of how long they stayed at their previous company.
A new workplace comes with its own culture, additional responsibilities and a new boss and colleagues. If you move to a new organization in the middle of the year, you might have to fill form 12B for tax purposes. If you are not aware of what it is and how to fill form 12B read on to know further.
You must have been filing your Income Tax return regularly right? However when you make a move from one company to another, how would your new company deduct TDS on your consolidated salary? After all, they don’t have any prior details of your previous income.
This is why as per Rule 26A, a new employee needs to submit Form 12B to disclose salary details of his or her previous company to their new employer. Filling Income tax form 12B in time helps your new organisation to streamline their TDS after taking into account TDS deduction made by your previous company.
It had been 4 months since Rachita had left her previous workplace. Not only was the long commute tiring, she had worked for two years under a short tempered boss with no raise. She had been looking out for a good opportunity and when she was offered a good pay hike, she immediately joined. She had more spare time now since her office was close by. The work culture too was good.
Today, someone from the HR department had summoned her. The lady enquired from Rachita if she knew about filling Income tax form 12B. Rachita was supposed to complete this formality way back. She did not know how to fill form 12B and hence had procrastinated. After all, it was her first job change. The HR representative asked her to submit form 12B before the deadline or else informed her that it could, in fact, increase her taxable income.
If you too are a first time job hopper, you might not be aware of it.
Is It Mandatory To Fill Form 12b?
Individuals who join a new company in the middle of the year are required to submit Form 12b under Rule 26A. It is an income tax form that discloses the information regarding the individual’s previous income from the previous employer. Every new employee is required to fill in and submit Form 12b to their new employer. The employee has to fill in the declaration in Form 12b along with Form 16 if provided by the previous employer. However, furnishing the Form 12b is not compulsory.
Where Can I Fill Form 12b?
Form 12B is required when you join a new company or organization in the middle of the financial year with respect to details of income earned from the previous company. You can ask your new employer to provide you with the form 12B and you can complete the details from your salary slip. Form 12b can be availed online and you can submit the filled form to the new employer.
Brief Guide on How to Fill Form 12B
- Start with writing down the proper name and full address of your previous employer.
- Then fill out the TAN (Tax Deduction and Collection Account Number) and PAN(Permanent Account Number) of your last organization. You can find both these on your earlier salary slips.
- Now write down the exact period of time that you were employed for.
- Fill in the income earned in the financial year before you joined your current firm.
- Give details of dearness allowance (DA), house rent allowance (HRA), leave encashment etc in column 7 and enter the PF amount credited to your account in column 8. Add up the total amount of columns 6, 7 and 8 to fill column 9.
- Give details of deductions such as Provident Fund (PF), life insurance premium etc under Section 80C.
- Fill in the total amount of tax deducted in the financial year.
Filling Income Tax form 12B also includes two pages of annexures. The first requires you to fill in the value of any rent-free accommodation that was provided to you by your employer. Further details of furnished and unfurnished accommodations (including perquisites value of furnishings) can also be mentioned if availed. The second annexure deals with conveyance allowance provided by the earlier company or any such similar benefits.
What Is The Difference Between 12b And 12bb?
Form 12B is required when an individual switches job in the middle of the financial year with respect to details of income earned from the previous company. On the other hand, Form 12BB is submitted when you start a new job or at the beginning of the financial year on an estimated basis. However, at the year-end you have to submit proofs/evidence against the tax exemptions, investments and expenses already claimed by you in form 12BB.
Apart from availing tax benefit when you submit Form 12B, taking a personal loan to pay towards your rent or for investment purposes, can also make you eligible for tax deduction. Personal loans of up to Rs. 25 lakhs are available on Finserv MARKETS and are approved instantly and require little or no paperwork. There are no hassles involved and what’s more, you can access your loan account 24X7. Also read how you can avail tax benefit on personal loan only at Finserv MARKETS. Hurry! Download our personal loan app to apply for your Personal Loan in just a few clicks.