Submitting Form 12B is a requirement for every individual taxpayer who joins an organization or company in the middle of the fiscal year, It gives the new employers information about their new employees and deducts TDS from the employee’s salary for the remaining financial year.
Filling out this form is necessary according to the rules set out in the Income Tax Act of 1961. Which gives detailed information about the income and the tax to be paid further in the upcoming months for the current fiscal year.
Importance of 12B
Employees who join an organization or company during the fiscal year utilize Form 12B. However, This form enables them to reveal their income details from the previous employer to the new employer.
Tax Deduction at Source (TDS):
Submitting Form 12B provides information to the new employer for calculating the TDS to be deducted from the employee’s salary for the remaining financial year. This helps prevent miscalculations in tax deductions.
Effortless Employee Shift:
Filing form 12B is mandatory as per the Income Tax Act. This will assure the new employer that the employee adheres to income tax regulations.
Avoidance of Penalty:
Proper disclosure of income through Form 12B helps employees avoid penalties or legal issues associated with incorrect or incomplete income information.
Content in Form 12B:
The employee should fill in the required fields in this form before submitting it to the new employer. It is mandatory to ensure that all filled fields are correct and true.
Here’s what you need to put in Form 12B
- Info about your previous job, like the company’s PAN and TAN numbers.
- Breakdown of your pay, including Basic Salary + DA, House Rent Allowance, Prerequisite, Leave Encashment, Leave Travel Allowance, and other similar things.
- Deduct the amount that went to your provident fund.
- Subtract any rent you didn’t have to pay for your house.
- Any deductions allowed by tax rules, like Sections 80C, 80G, 80D, 80E, and Section 24.
- If you paid any professional tax or if your old boss took some tax money from your salary (TDS), mention that too.