Form 12B is an essential document filled out by an employee who transfers to a new organisation or company. The main purpose of this form is to attain adequate information regarding the past income and employment of the employee. 

 

In addition, it helps verify employment information provided by the employee. Form 12B of the Income Tax Act, Rule 26A, also assists in calculating income tax. It serves as a record of your income through various jobs in a financial year.  

 

With this information in one place, the tax calculation process gets easier and more streamlined. However, accurate filling and filing of Form 12B is crucial.

How is a Form 12B Significant for Employers and Employees

As a new employee, you need to submit your Form 12B along with supporting documents of investment by March 31st. Filing it accurately can result in quick and hassle-free processing. 

 

As such, Form 12B contains essential information about the prior salary and other deductions of the new employee, which helps the new employer as well. This makes businesses deduct an accurate amount of the TDS from a particular employee’s gross income annually.

Contents and Details in Form 12B

Form 12B includes the following content:

  • Your PAN/Aadhaar, residential status, and address

  • PAN/TAN of previous employer/employers

  • Previous salary breakdown (basic salary, HRA, DA, travel leave allowance, etc.)

  • Tax Deducted at Source (TDS) from the previous salary

  • Employee Provident Fund (EPF) deductions

  • Professional tax, if any

  • Other deductions under the Income Tax Act

Benefits of Form 12B

Here are some benefits that you get with the submission of Form 12B:

1. Consolidated Information on Salary

Form 12B requires you to put in all your salary-related information. This includes financial information related to your previous employment, such as your basic salary, allowances and information related to tax deductions. As such, everything is in a single place, making it easily accessible.

2. Accuracy in Tax Computation

Another benefit that you get by filling out the form is increased chances of accurate tax calculations. With all your exemptions and deductions in one place, you can reduce the chances of error and conveniently compute your tax calculation.

3. Streamlined Transition to A New Company

Switching jobs is hectic, but filling out Form 12B can make your transition from your previous job to your new job quite convenient. This form helps in providing the necessary information regarding your previous job. 

 

This information includes the name and location of the previous organisation, the total time that you worked there, tax payments, salary breakup and much more. This way, the documentation and verification process gets much easier for you as well as your employer.

4. Benefit of Tax Deductions

Another benefit of filling out Form 12B is that you can claim tax deductions. These deductions translate to reduced tax liability, helping you in saving your money. Under the Income Tax Act, you get various tax deductions on your investments and expenses.

 

These benefits include house rent allowance, life insurance, medical insurance, government investment schemes like NSC and more. Since you put some of this information in the form, you are less likely to miss out on claiming the applicable deductions.

5. Compliance with Taxation Rules and Policies

Successful submission of Form 12B ensures that you comply with the tax rules and regulations set by the government. This demonstrates that you adhere to the regulations, which helps you avoid applicable penalties and punishments.

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Process of Filling Form 12B

You can fill out Form 12B after downloading it from the official website of the Income Tax Department. Here is a step-by-step overview of the steps you can following completing the Form 12B download process: 

  • Step 1: Fill in the name and the address of your previous employment

  • Step 2: State the duration of your employment

  • Step 3: Enter total earnings in the final year prior to shifting to the current employment

  • Step 4: Put in the breakdown of your previous salary (basic salary, LTA, HRA, DA, etc.)

  • Step 5: Fill in the details regarding provident fund contributions

  • Step 6: State your investments and other expenses for deduction under Section 80C 

  • Step 7: Cross-check and confirm the details

 

As you can see, Form 12B of the Income Tax Act, Rule 26A, has numerous advantages for both employers and employees. Even though this form is not mandatory by the government, filling it can be a smart decision. 

FAQs on Form 12B

What information is required to fill out Form 12B?

While filling out Form 12B, you need to state the details regarding your previous income and employment. These details include the name and location of your past organisation, PAN and TAN of the employer, the duration of your employment, total earnings in the previous fiscal year, salary breakdown and more.

When should I fill out Form 12B?

You are required to fill out Form 12B when you join another organisation in the middle of the year. You should fill and submit the form before the financial year ends, i.e., on or before 31st March.

Where can I get Form 12B?

In many organisations, the employers provide Form 12B to the employees. You can also download it very conveniently through the official website of the income tax department. You can download this form without any charges.

What happens after I submit Form 12B to the employer?

After the successful submission of Form 12B, the employee verifies the information provided by you in the form. After that, the employee issues you a Form 16.

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