Salaried individuals have to give details of deductions they are eligible for under the various provisions of Income Tax Laws from this year. The tax department has this year notified a new form - called Form 12BB.
Employees will now have to furnish evidence of claims and tax-saving investments to their employers through Form 12BB. The practice of furnishing details of deductions to employees is nothing new. But earlier, there was no standard format. Tax experts say that now with a standard format in place, it will help in better documentation for both employees and employers.
The employers on the basis of Form 12BB will deduct TDS (tax deducted at source) and pay monthly salary.
"Form 12BB is a standardized form of declaration to be obtained from the employees by the companies for calculating their final tax deductions. Earlier, the companies used to have their own formats and the onus was on employees and the companies that all the necessary information have been furnished. With the new form, it will be easier for both employees and companies as the form is comprehensive enough," said Sandeep Sehgal, director tax and regulatory at Ashok Maheshwary & Associates LLP.
"The employees are advised to ensure that all their necessary claims filled in are correct and related proofs are attached so that no claim is left out due to oversight. Furnishing incomplete information or in incorrect format may lead to rejection of claim by the company and may lead to excess tax deduction," he added.
Under the new form, it is now mandatory for salaried taxpayers to furnish proof of travel for claiming tax deduction on LTA/LTC (leave travel allowance/concession).
Employees are also required to furnish evidence for claiming house rent allowance (HRA) if it exceeds Rs. 1 lakh in an assessment year. The details include name, address and PAN of landlord where the aggregate rent paid exceeds Rs. 1 lakh. The tax authorities in turn through the landlord's PAN can also verify whether the rent received by the landlord has been duly disclosed in his/her tax return.
For claiming deduction of interest on home loan, the lender's details have also to be furnished.
Under Section 80C, a deduction of Rs. 1.5 lakh can be claimed from total taxable income if invested/spent in PPF, the employee's share of PF contribution, life insurance premium payment, children's tuition fee, principal repayment of home loan, and Sukanya Samridhi Account, among others.
Section 80E provides for deduction of interest on loan taken for pursuing higher education.
First time home owners can avail an additional deduction on home loan interest of Rs. 50,000, over and above Rs. 2 lakh under Section 80EE if the value of the property purchased is less than Rs. 50 lakh and home loan is less than Rs. 35 lakh.
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