How to fill Form 12BB?

All the salaried taxpayers need to fill Form 12BB. It is supposed to be submitted at the beginning of every financial year by the employee to his/ her employer for the correct deduction of TDS. It discloses all their tax-saving investments of that particular financial year.

Steps to Fill Form 12BB

Time needed: 3 minutes.

  1. Download Sample Form 12BB

    You can download the sample Form 12BB from the Income Tax Department website.

  2. Add Personal Details

    Fill Personal Details i.e, Add your Name, Address, and PAN details. Also, mention the current financial year i.e 2020-2021.

  3. Add house rent allowance Details

    If you are incurring any rental expenses for your work then that can be deducted under HRA.

  4. Add LTA Details

    Add details of LTA if any.

  5. Enter Details regarding Interest on Loan for Borrowings

    If you are paying any Interest on EMI of home loans in this particular Financial year it can avail you benefit up to 2,00,000 for self-occupied property and no limit on rented property.

  6. Add Chapter VI-A Deductions

    Add details of tax deductable investments and deductions under 80C, 80CCD (1B), 80D, 80DD, 80E, 80G etc.

Who needs to Fill Form 12BB?

Effective from 1st June 2016, Every salaried taxpayer has to submit Form 12BB. You will also have to submit proofs/evidence to support your investments. It can help you reduce your taxable income and it also helps your employer to deduct correct TDS from your salary. 

Yet in case… If you haven’t filed your Form 12BB your employer might have deducted excess TDS from your salary. But, you can claim your excess TDS while filing your Income Tax returns.

FAQs

What is Form 12BB?

Salaried employees have to provide certain information to their employer in order to avail tax benefits while filing for Income Tax Return. There was no particular standard format before to disclose investments. But, from June 2016, Introduction of standard form 12BB has made lives easier.

What is the purpose of form 12BB?

Form 12BB serves the following two purposes:
1. Helps employer deduct correct TDS of an employee,
2. Helps employee determine his tax liability and make tax savings investments accordingly.

Do I have to submit the Form 12BB to Income tax department?

No, the form is not to be submitted to the Income-tax department. It is to be submitted to the employer.

Income Tax Refund in India: Eligibility, Procedure and Types

A taxpayer becomes eligible for an income tax refund when taxes paid are higher than your actual tax liability inclusive of interest. It could be in the form of advance tax, self-assessment tax, TDS, etc. In the following instances, the taxpayer becomes eligible to claim tax refund:

  • When the advance tax paid on estimated income is higher than the actual tax liability of a taxpayer.
  • If tax deducted at source (TDS) from salary, interest, professional or other incomes is higher than the tax payable on regular assessment.
  • When self-assessment tax paid is in excess of actual tax liability.
  • When an income is charged in India and in a foreign country. (with whom the Indian government has an agreement to avoid double taxation).

How to claim Income Tax Refund?

A few basic things to keep in mind if you want to claim a refund.

  • Don’t forget to submit Form 12BB Investment Declaration to your employer
    • It contains details about HRA, Leave Travel Allowance, and other section 80 tax deductions.
    • Your employer will calculate accurate TDS based on your investment declaration form and you will save yourself from excess TDS.
  • Entered all the deductions in your income tax return.
    • If you don’t enter deduction details in tax return then your tax liability will be higher than the TDS deducted by an employer.
    • You will end up paying tax which you are not liable to.
  • File an income tax return to claim a refund.
    • If you do not file an income tax return then all your tax credits including TDS and advance/self-assessment taxes will go in vain.
    • Income Tax Department will not automatically pay you a refund just because you have paid taxes.
    • Declare all the incomes and deductions in ITR to show that your taxes paid are greater than the actual tax assessed.

Once you have filed your income tax return, you need to wait for assessment from the Income Tax Department. Here what you need to do:

  • You will receive an intimation u/s 143(1) once the return is processed.
  • It will contain a comparison of income and tax calculation as per your tax return and as per the Income Tax Department.
  • The refund is correct if the refund amount as per ITR and Intimation is the same.
  • When there is a discrepancy you need to check the calculations for reasons of mismatch.
  • If there is any calculation error then you can rectify your return u/s 154(1)

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Types of refund status

Once a tax payer files his return, they want to know the status of their refund. IT Department has classified different refund statuses for the taxpayer. It is important to understand the meaning of refund status. Since refund status determines the next course of action that needs to be taken by the taxpayer.

Check Income Tax Refund Status
Track Income Tax Refund online using PAN. The Income Tax Department issues the refund once the ITR is processed. Check your ITR refund status.
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Check Income Tax Refund Status
Track Income Tax Refund online using PAN. The Income Tax Department issues the refund once the ITR is processed. Check your ITR refund status.
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Different Refund Status on income tax e-filing website:

Refund Status Meaning Course of Action
No e-filing has been done for this assessment year You have missed filing the return for that assessment year. OR The paper return was filed for that year.    File your Income Tax Return immediately. You can file your return from here.
Not Determined IT Department has still not processed your return Confirm if your return is filed and duly e-Verified. 
Refund Paid IT Department has sent the refund to you.  If you have not received a refund yet: In case of direct credit to your bank account contact your bank. In case of refund cheque, check out with the post department.
No Demand No Refund This means you have claimed a refund in your return but as per the department’s calculation, you are not liable for a refund.  In case of any error in a filed return, revise your return. OR If you have received an intimation then understand the reason of difference and then file rectification return.
Refund Unpaid Income Tax Department has sent a refund to you but either your address is wrong or bank details provided are incorrect.   Find out the reason for refund failure and then raise a refund reissue request
ITR processed refund determined and sent out to Refund Banker The department has sent the refund details to the refund banker. Contact your bank. 
Demand determined Department has rejected your refund claim and raised an outstanding demand.  Understand the notice. If you find that your own refund request was erroneous then pay the demand. OR If there is a mistake made by the department, you can file a rectification.
Contact Jurisdictional Assessing Officer Whenever the department needs some more information regarding your ITR. You receive this message. Contact your AO via telephone, mail or post.
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Interest on Income Tax Refund

Many times the taxpayer does not get the refund in due time, in such a case Income Tax Department pays interest on late refund. However, no interest shall be payable if the amount of refund is less than 10% of the tax as determined under section 143(1) or tax determined under regular assessment. Section 244A mentions the provisions in this regard which are as follows:

Amount of Interest on Refund

  • Where the refund arising to the taxpayer is out of any TDS/TCS or tax paid by way of advance tax, then the taxpayer shall be entitled to interest calculated at the rate of 0.5% for every month or part of a month. Interest shall be allowed for a period commencing from the 1st day of April of the assessment year to the date on which the refund is granted if the return is furnished on or before the due date of filing of return specified under section 139(1) otherwise interest shall be allowed from the date of furnishing of return of income to the date on which the refund is granted
  • Where the refund arises to the taxpayer is out of taxes paid by way of self-assessment tax then the taxpayer shall be entitled to interest calculated at the rate of 0.5% for every month or part of a month. Interest in such a case shall be allowed for a period commencing from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted.
  • In any other case (i.e., a case in which refund is due to reasons other than those stated above), interest shall be calculated at the rate of 0.5% for every month or part of a month for a period commencing from the date/dates (as the case may be) of payment of the tax or penalty to the date on which the refund is granted. Further, the expression “date of payment of tax or penalty” means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.

Taxability of Interest on Income Tax Refund

The interest amount is taxable under the head “Income from other sources”. Further, while filing returns for the financial year (FY) in which the refund was given, the interest will be taxable as per the tax slab rate of the person.

FAQs

Why am I not getting any refund?

Your may not be getting refund for one of the following reasons:
1. You may not have filed an income tax return for the relevant assessment year
2. Your taxes paid matches your total tax liability for a relevant assessment year
3. You might have forgotten to claim taxes paid on your return
4. You might have furnished incorrect bank account details in your return

Is income tax refund taxable?

No, refund received by a taxpayer is not taxable. But, any interest received on the refund is taxable in the year in which refund is received by a taxpayer.

How long does it take to get a tax refund?

Income Tax Department processes the refund only after processing your ITR. Generally, it takes 30-45 days from the date of e-verification of your Income Tax Return to get your refund credited. Further, IT Department is planning on processing refund faster in coming years.

What needs to be done if the refund is not processed?

Taxpayer’s records are transferred to the jurisdictional assessing officer by CPC after a particular time period for every assessment year. Taxpayers receive an intimation regarding the same. Therefore, once the AO receives the files, one can follow up for a refund by submitting a letter in this regard to the jurisdictional assessing officer and follow up personally at regular intervals.

Where will I get my income tax refund?

You will receive your refund directly in your Primary bank account. You can choose the primary bank account while filing your ITR.

What to do if my tax Refund is returned?

If your tax refund status is ‘refund returned’ then it means when ITD had tried to credit the refund to your bank account, but it failed. In such a case you are required to submit a refund reissue request.

Form 12BB : Investment Declaration

Form 12BB (Investment Declaration) is an essential document for a salaried person. It is basically a disclosure of all their tax-saving investments in that particular Financial Year. Form 12BB is required by the employer for an accurate calculation and deduction of TDS on salary income. It needs to be submitted at the beginning of every financial year.

For example… Mr. Yash has invested 3 lakhs in tax saving schemes in this FY 2019-20. So, he has to file his form 12BB disclosing all the details of those investments to his/her employer between 1st April 2019 to 30th June 2019. While He can submit all evidence of those investments between 1st January 2020 to 31st March 2020. This practice is advisable for an accurate TDS deduction.

Sample Form 12BB – Investment Declaration

Download Sample from ITD
Form 12BB
Download the draft of Form 12BB
Download
Form 12BB
Download the draft of Form 12BB
Download

Supporting Documents – Form 12BB

FAQs

Is it mandatory to submit Form 12BB?

No. It is not mandatory to submit the Investment declaration. However, if you do not submit the same to your an employer, than he will deduct excess TDS on your total salary without allowing you any tax deductions. So it is highly advisable to submit your investment declaration in Form 12BB to your employer.

When do I have to submit Investment Declaration?

Generally, employers ask for a declaration in the month of April i.e, at the beginning of the financial year to calculate TDS for the year. If you join a new job then at that time you need to submit Form 12BB. Employees may submit the investment proofs later on during the financial year.

What if I don’t submit Form 12BB on time to my employer?

In case you don’t submit form 12BB to your employer within a prescribed time, the employer will not be able to give you the benefit of deductions. As a result, excess TDS will be deducted from your salary. Do not worry you can claim a refund of such excess TDS while filing your income tax return.

Do I have to submit Form-12BB to income tax department?

No. You need to submit Form 12BB to your employer. This form will allow the employer to calculate and deduct accurate TDS from your salary.

LTA : Rules, Tax Exemptions and Conditions to claim

LTA (Leave Travel Allowance) is an allowance paid by employers to their employees when they are on leave and traveling alone or with family within India. Subject to certain conditions, it is tax-free in the hands of the employees.

What is LTA – Leave Travel Allowance?

LTA is an allowance received by the employee from his employer for travelling on leave. There are many situations that need to be considered before planning a trip for the purpose of claiming LTA.

Conditions to Claim LTA Exemption

  • Leave travel allowance should be part of employees Salary i.e employer pays an allowance to an employee as part of his/her salary
  • An exemption is applicable for incurred expenses by the employee and his/her family for the purpose of travel in India.
  • Family for purpose of leave travel allowance includes:
    • Spouse and children
    • Parents, brothers, and sisters who are wholly or mostly dependent on employee.
  • It covers only cost of travel for the trip (travel through rail, air or any other public transport). It does not cover the cost of hotel accommodation, food, etc.
  • Leave Travel Allowance covers only domestic travel and does not cover international travel
  • An exemption is available only for two trips in a block of four calendar years. The current block for leave travel is 2018 to 2021.
  • If an exemption is not availed during the block period, it can be carried over to the next block and used in the first year of the next block.

LTA Exemption

Section 10(5) of the Income Tax Act along with and Rule 2B have prescribed the conditions and amount of exempt leave travel allowance. Subject to these conditions, Leave Travel Allowance is tax-free in the hands of the employees.

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Eligibility to Claim LTA

The LTA exemption is available only on the actual travel costs. Expenses such as sightseeing, hotel accomodation, food, etc are eligible for this exemption. It is also limited to the LTA provided by the employer.

How to Claim Exemption on Leave Travel Allowance?

Employees can claim Leave Travel Allowance exemption by submitting details in Form-12BB. With the newly introduced Form 12BB, employees can provide detail of their travel during the financial year. They should also submit the proof in support of their claim. Employees can submit boarding passes, air tickets, train tickets, invoices of travel agents, etc, as documentary proof to their employers.

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FAQs

Can I claim LTA on internation travel?

No. LTA can be claimed only for domestic travel. You can only claim LTA if the Employer provides it as part of your salary structure. You can claim an exemption on LTA under section 10.

Can I claim LTA every year?

No. You can claim LTA only twice in a block of 4 years. The current block of four years is 2018-2021. However, you can claim LTA reimbursement every year from your employer.

Do I have to submit any document proof to claim LTA?

Employees do not have to submit any proof to Income Tax Department while filing ITR on IT Portal. However, employees are advised to maintain proofs such as flight tickets, invoices from travel agents, passes, etc.

How to know exempt LTA amount?

Employees can know exempt Leave Travel Allowance amount from Form 16 issued by the employer at the end of the financial year. It is exempt u/s 10(5) of the Income Tax Act.

Which ITR can be filed if LTA exemption is claimed?

Since Leave Travel Allowance is a part of salary income. An employee can file ITR-1 while claiming exempt HRA. However, salaried needs to file ITR-2 if income is more than Rs. 50,00,000.

Tax consequences of switching Jobs during the year

People change jobs for higher salaries, better prospects, better exposure, etc. It’s common for people to move jobs during the financial year going after better pay or better work. But this results in various tax consequences of switching jobs mid-year. Communicating your last drawn salary and deductions claimed can solve half of your problems.

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Tax Consequences of Switching Jobs

Higher tax bracket due to switching jobs

Always check if the new job is putting you in a higher tax bracket. Let’s say if you are currently earning a Taxable Salary Income of INR 7,50,000 in the 20% tax bracket. And after switching jobs, your Taxable Salary Income is INR 10,65,000 which will take you into the 30% tax bracket. This could mean a substantially higher tax outgo. Which you need to communicate with your employer and ask them to deduct your TDS accordingly.

Furnishing Form 12BB with the previous salary details

Once you join the new employer, he/she will ask you to submit Form 12BB. Which includes the details of salary paid by previous employer and TDS deduction. One needs to be careful while filling Form 12BB as it will be the basis on which your employer will deduct TDS in the remaining month of the financial year.

You can also submit Taxable Salary of Previous Employer from your Form 26AS.
Tip
You can also submit Taxable Salary of Previous Employer from your Form 26AS.

Take a copy of Form 16 from the previous employer

Don’t forget to take a copy of Form 16 from your previous employer. Even though Form 16 is available after the end of the financial year, you will receive an interim Form 16 from your previous employer including details of salary paid, TDS deducted on your salary. This will help you to fill up Form 12BB which you need to submit to your new employer.

Upload Form 16
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Avoid claiming Deductions twice

Only claim tax-saving deductions and exemptions once. You can avoid this situation by submitting Form 12BB to your new employer. Just make sure that you claim only those deductions which you did not claim during earlier employment.

If you were unable to submit Form 12BB then you may have to check whether you are liable to pay any Advance Tax or Self-Assessment Tax. If your new employer has not taken into account your old employer’s TDS and deductions claimed, you might end up owing tax along with some interest penalty. In that case, you will end up with tax dues even after the deduction of TDS by both the employer.

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Example

Dinesh switched jobs during FY 2018-19. The following are his salary and TDS details.

Particulars Income from
ABC ltd (in INR)
Income from
XYZ ltd (in INR)
Actual tax liability (in INR)
Income from Salary 5,00,000 (April-September) 7,00,000 (October-March) 12,00,000
Less:
Basic Exemption Limit
(2,50,000) (2,50,000) (2,50,000)
Taxable Income 2,50,000 4,50,000 6,50,000
Tax Liability 0 10,400 44,200
Monthly TDS deducted by the employer 0 1733 for six months  
Total TDS deposited by the employer 0 10,400 10,400
Tax liability at the year-end     44,200
TDS shortfall     33,800

 

Conclusion

  • Higher Tax Bracket: When total salary income from both the employer is considered, Dinesh’s income falls under a 20% tax bracket.
  • Double Deductions: Both the employers considered the basic exemption limit of INR. 2,50,000 before deducting TDS. Hence there is a shortfall of INR. 33,800 which Dinesh will have to pay with interest penalty before he files his ITR.

You can avoid a shortfall in taxes by communicating your previous employment details (salary, allowance, deductions claimed, etc) accurately to your new employer. You can do it by submitting Form 12BB / Interim Form 16 to your new employer. Which will enable your new employer to calculate TDS accurately.

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FAQs

What to do if TDS is not properly deducted by an employer?

You need to ask your current employer to rectify the error and deduct the correct TDS on your total salary income. The other option is to pay the Advance Tax or Self Assessment Tax by yourself.

Can I file ITR-1 if I have switched jobs during the year?

Yes. You can file ITR-1. Further, make sure to consolidate the salary from both the employers before filing ITR.

Yes. You can file ITR-1. Make sure to consolidate the salary from both the employers before filing ITR.

Yes, you should declare your income from previous employment to the current employer. This will help the current employer to calculate tax on your total income for the year and deduct TDS accordingly. If you dont show the income the same will not get taxed, but you are violating the laws