Form 12BB: Claim Deductions for Investments & Expenses
Last Updated : March 14, 2023, 1:25 p.m.
Investment declaration is generally made at the start of the financial year. Individuals are asked to declare their tax-saving investments so employers can deduct tax from their salary. By saying investments, people can get a higher in-hand salary. It is vital to estimate the investments people intend to make at the start of the year. Thus, Form 12BB is essential for any salaried person for the tax deduction for expenses and investments.
While people plan their investments, investing in stable options, such as market-linked avenues like mutual funds, or fixed deposits, it is equally vital to be aware of Form 12BB and submit it to their employers. Form 12BB, also known as 12BB form can reveal the expenses and investments you have made or incurred to request tax exemptions through the employers. Generally, individuals need to submit Form 12BB in January or February, including proof of their investments. Depending on this detailed information, the employer will be able to calculate TDS on their employees’ salaries.
So, before you have to fill and submit the 12BB form for a financial year, let us discuss a few crucial things below that you need to know.
What is Form 12BB?
Form 12BB enables people to declare their investments and expenses, so the employers of those people can be able to deduct TDS from their salaries as per the rules and regulations of the Income Tax department. It has been in practice since June 2016 to standardize this procedure and can be accessed from the website of the IT department. According to the IT department, as of 1st June 2016, all salaried individuals must submit their 12BB form to their employer for the purpose of claiming tax rebates or benefits on expenses or investments.
This Form 12BB needs to be submitted at the close of the financial year. For example, an employee must declare all his or her investments through the financial year in the 12BB form. Also, the person must give documentary proof of their expenses or investments at the end of the financial year.
What is the purpose of Form 12BB?
The claims an individual has made for multiple tax benefits are listed on the 12BB form. As per the regulations of the Income Tax Department, individuals are required to submit this 12BB form to their employers to receive a tax refund.
What kind of deductions may people claim vis Form 12BB?
There are several types of deductions that you can claim through the 12BB form, such as:
- Interest payable on your home loan
According to Section 24 of the IT Act, a person can claim tax benefits for the interest on his home loan by submitting the interest certificate given by the lender. You just need to enter the actual interest amount you have borne, along with your lender’s name, address, and PAN number, in the 12BB form to do so.
2. LTA or Leave Travel Allowance
You need to add the amount and proof of expenses you have incurred for travelling purposes to claim your LTC and LTA.
3. HRA or House Rent Allowance
In order to claim your House rent allowance, add the complete name and address of your landlord and copies of your rent receipts. In addition, if your total amount of house rent exceeds Rs. 1 lakh, you need to submit the PAN number of your landlord.
4. All tax deductions (for example, sections 80C, 80D, 80DD, 80GGA, 80G, 80TTA, 80GGC, 80U, etc.)
To get tax exemption benefits for all expenses made under Chapter VI A of the IT Act, you must fill out the 12BB form with the required details and proof of your expenditure and investments.
Where do you need to invest to request tax deductions in form 12bb?
Individuals may ask for deductions under Section 80C for the premium of life insurance they have paid. One can even ask for tax exemptions for any investment done in NPS, ELSS, PPF, or any other kind of tax saving deposits, along with the education fees paid for their kids.
Section 80CCC covers any kind of premium a person has paid for a specific annuity plan; however, Section 80CCD covers any other contribution a person has made for NPS.
On the other hand, Sections 80D and 80E cover the premiums of medical insurance and interests paid on education loans, respectively. You should include information about the donations you have made to various charitable organisations under Section 80G and also include information regarding the interest earned from a certain savings account under Section 80TTA.
While selecting your investments, you should ensure that you weigh the benefits of avenues that can provide tax savings and those that can help you to grow your wealth.
When do you need to submit Form 12BB?
You need to submit your 12BB form at the end of the fiscal year, generally in January or February, along with proper proof and documents regarding your investment.
Where do you need to submit your Form 12BB?
You need to submit your 12BB form to your employer and not to the Income Tax Department. Based on that, your company will calculate the TDS on your salary.
Is it reasonable to invest in tax-saving fixed deposits?
While making tax-saving investments, you may see several company fixed deposits that may not provide tax savings but help you to increase your savings efficiently. In addition, some of those investments can offer lucrative interest rates, which are a lot more than those usual tax-saving FD interest rates. Those fixed deposits with lucrative interests can be a good option for you as they will help you grow your principal without facing the risks of market fluctuations, and hence, you can benefit from assured returns and stability. So, you just need to invest wisely to enjoy excellent and assured returns.
Conclusion
Therefore, in order to enjoy tax exemptions and deductions, you need to fill up Form 12BB and submit it to your enjoyer by the end of the fiscal year and enjoy a peaceful and secure life.