If you are an employee of a company, at the beginning of every financial year (or) while joining the company you have to submit ‘Income Tax Declaration’ to your employer. This is a provisional statement that has details about your proposed investments and expenses that are Income Tax deductible.
At the financial year end, you need to provide supporting Investment Proofs for these investments that you have specified in IT declaration.
Based on your proposed investments and expenses, your employer deducts TDS (Tax Deduction at Source, if any) from your monthly salary and deposits it to the government account. To calculate TDS, your employer considers the declared investments and expenses that are either Tax Exempted (or) eligible for tax deductions under Income Tax Act.
Till date there has been no standard reporting format or template available for furnishing the details of investment or expenditure proofs.
As of now, to claim tax benefits or rebate, an employee has to just mention the sum claimed under exempt allowances. But with effective from 1st June, 2016 to claim income tax deductions you need to submit new Form 12BB to your employer. It is also been made mandatory to submit documentary evidence of your investments / expenditures.
The Central Board of Direct Taxes (CBDT) has recently released New Form No. 12BB. This is going to be the new standard form for salaried tax payers to claim tax deduction on;
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Below is the latest and standard Form 12BB. Click on the image to download Form 12BB.
The below details are part of the new Income Tax Rule 26C. Form 12BB has to be submitted by employees to their employers in relation to;
House Rent Allowance : House Rent Allowance is exempt under section 10 (13A) of the Income Tax Act. To claim HRA, you have to provide documentary evidence i.e., Rent receipts. You also have to provide details of landlord (name & address) and the amount paid as rent. Permanent Account Number (PAN) of the landlord shall be furnished if the aggregate rent paid during the year exceeds one lakh rupees.
Leave Travel Allowance : With effective from 1st June, 2016, the CBDT has made it mandatory for all the salaried employees to submit travel related expenditure proofs to their employers.
Interest Payments on Home Loans: To claim income tax deduction under section 24 on home loan interest payments, you have to furnish details of interest amount payable/paid, lender’s name & address & PAN number of the lender in Form 12BB. (Read: ‘Income from House Property & Income Tax Benefits‘)
Income Tax Deductions under Chapter VI -A: You have to provide the details & evidences of your investments or expenditures related to various sections like 80C, 80CCC, 80CCD, 80D (medical insurance premium), 80E (deduction of interest on education loan), 80G (donations), Section 80EE etc., in Form 12BB.
The CBDT has advised the employers to assess the evidence submitted by their employees and then accordingly decide the extent of tax that should be deducted at source from their salaries.
I believe that the tax authorities are aiming to bring in consistency in respect of the income tax benefits being claimed and also to ensure that necessary documentary evidence, as prescribed, is maintained while making the claims.
(Image courtesy of pandpstock001 at FreeDigitalPhotos.net) (Post Published Date : 05-May-2016)
This post was last modified on March 26, 2026 5:10 pm
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Dear Mr. Reddy,
I have one doubt about the Form 12BB.Does it have to be a physical(Hard) copy or can the employee submit a soft copy.
Dear Balaji..The format has been provided and the submission to the employer can be online/offline, kindly check with your employer.
Hi,
My Company has asked me to declare the PAN of my Landlord this month(Rent is above 1lac.)
My Landlord did not have a PAN last year and hence gave a declaration, does this hold good this year or what is the process?
Dear Sreekanth Reddy , the PAN copy is most and if you have Paying more than one lakh he must have Pan
Dear Gopi..As of now with the available information, it should hold good. If it is not acceptable then I am sure your employer will get back to you for landlord PAN details :)
Thanks a lot. Your response is well appreciated.your financial wisdom provides light to many. Very comprehensive articles and you have taken trouble to present it in simple manner understandable to layman.its commendable
Dear Mr. Shreekanth,
also regarding the income from capital gains on sale of shares if its tax free after year , is it still taxable in the hands of the investor?
if such is the case then is it possible that person can fully be invested in tax free bonds for monthly income over the tax limit specified. that is say if his income is purely from tax free bonds and sale of shares (after one year). Eg. say if the annually income is say around 4 lakhs, then he wont have to pay any tax as it is from tax free bonds ?
Best regards,
Melroy
Dear Melroy,
1 - No, it is not taxable.
2 - Yes. But can be reported this in Exempted Income Schedule.
Dear Sir, Namaste
I recently came across your blog and found it very very useful. Keep up the good work your doing , may the Parmatma bless you and reward you for this valuable service to Bharatiyas.
I have following query which i feel only you can answer with your vast knowledge on finance & investing :
1) Suppose a individual is earning yearly income from tax free bonds which amounts to above the 2.5 lac taxable limit , does it mean that there is no tax at all to be paid on interest income (in the hands of the investor) from tax free bonds even if its substantially above the taxable limit for individual? This is assuming there is no other income earned by the individual from other sources .
2) in a Bond fund what is done by the fund house with the interest income earned from the bonds purchased, is it paid out as income or is it reinvested? Similarly for the dividends earned by the Equity funds on the various shares they own in name of investor, how is it disbursed or is it reinvested?
I will appreciate if you can provide answer to my above queries.
Thanking you,
Melroy
Dear Melroy,
1 - Ideally the interest income from Tax Free bonds can be shown under 'Exempted Income (ET)' schedule of ITR.
2 - It depends on the 'growth' or 'dividend' option that an investor chooses.