Form 12BB : Investment Declaration and Form 12BB

Updated: 18-01-2024 10:12:51 AM

Individuals especially the salaried ones who are required to pay tax in advance also known as tax deducted at source (TDS) are asked to submit investment declarations by the employer at the beginning of the financial year. Such investment declarations eligible for tax deductions can decrease your tax burden as TDS will be deducted on adjusted taxable income. Form 12BB is part of the investment declaration and proof submission process.  

 

However, in the beginning of the financial year, you just need to submit only the estimated investment declaration for the year. As part of this declaration, you are not required to submit the proof of investment. But proof of investment is required at a later date and this is where Form 12BB comes into the picture.  

What is Form 12BB?

Form 12BB [ Download ] is essentially a statement of claims made by the employee for tax saving purposes. You can declare deduction eligible actual investments made or any such expenses on which tax rebate is provided. Form 12BB is filed at the end of the financial year.

It should be noted that Form 12BB needs to be filed along with valid proof of investments or expenses on which you are claiming tax benefits and It is applicable to all salaried taxpayers.

Is It mandatory to file Form 12BB?

With effect from 1st June 2016, every salaried taxpayer is mandated to file Form 12BB to his employer to avail tax benefits on specific investments and expenses. Also, filing supporting documentary evidence along with the Form 12BB is a mandatory requirement.

What declarations can I make in Form 12BB?

You can declare following tax deductible salary components along with supporting proof (where applicable) while filing Form 12BB :

1. Housing Rent Allowance (HRA)

In the first part of Form 12BB, you can provide details to claim the tax deduction on Housing Rent Allowance (HRA). To claim HRA, you need to provide the following details:

• Rent receipts along with name and address of the landlord
• PAN of the landlord (if the rent paid is more than Rs.1 lakh annually)
  
  2. Leave Travel Allowance (LTA)

The employee can also declare LTA for tax exemption purposes. Section 10 (5) of the Income Tax Act, 1961 provides tax-exemption benefits on the LTA received by an employee. However, it should be kept in the mind that tax benefits on LTA can be claimed for domestic travel only and that too only up to 2 times in a block of 4 calendar years.

Also Read: LTA Rules: How to Claim LTA Allowance?

     3. Interest on Home Loan

The employee can avail tax deduction benefits on your home loan under section 80C (principal repaid) and section 24 (home loan interest payment) when filing form 12BB. You can also include registration fees, stamp duty and brokerage charges for tax deductions under various applicable sections.

4. Deduction Under Section 80C, 80CCC, 80CCD, 80D, and 80E

There are a number of deductions under section 80C and its subsections that you can declare while filing form 12BB.

• Section 80C: Premium paid to life insurance or investment made in PPF, ELSS, NPS, PPF, tuition fees of the children etc. with a cumulative limit of Rs. 1.5 lakh.
• Section 80CCC: Deduction on premium paid for annuity plan
• Section 80CCD: Additional contributions made to NPS

• Section 80D: Premium paid for medical insurance
• Section 80E: Interest paid on education loan
• Section 80G: Donations made to specified organizations
• Section 80TTA: Interest income earned on saving bank account

What happens in case of delayed investment declaration?

If an employee has not made investment declaration using Form 12BB on time, then the employer may deduct a higher amount of TDS than originally computed based on the investment declaration submitted earlier in the year. However, the employee can claim a refund on this excess TDS deducted while filing the income tax return.