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Form No. 12BB – Particulars of claims by an employee for TDS on salary

Employers seek information on and proof of investments/expenditure from employees who wish to avail tax benefits each year. The benefits include those on allowances such as House Rent Allowance and Leave Travel Allowance, and those on deductions such as interest payment on housing loan (Section 24) and payments towards life insurance premium etc. under Section 80C, and other sections. As of now (May 2016), there is no format as prescribed by the Income Tax Department with regard to how information on investments/expenditure should be collected. So far, organizations have been using their own formats for the purpose of collecting information from employees in this regard.

The Income Tax Department, by way of a notification dated 29-Apr-2016, has prescribed a format called Form No. 12BB for collection of investment/expenditure information from employees. This comes into effect on 01-June-2016.

According to Rule 26C of the Income Tax Rules:

The assessee shall furnish to the person responsible for making payment under sub-section (1) of section 192, the evidence or the particulars of the claims referred to in sub-rule (2), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source.

Information to be submitted in Form No. 12BB

Form No. 12BB should contain:

1. Name, address, and PAN of the employee.
2. Financial year to which the form pertains.
3. For each of the tax benefit sought, the following information:
   • Nature of the claim (House Rent Allowance, Leave Travel Assistance, Housing Loan Interest, Benefit under Section 80C etc.)
   • Amount in Rs (HRA paid, LTA paid, Housing Loan Interest payable/paid, Investment under Section 80C. etc.)
   • Evidence/particulars (Landlord details for HRA, Lender details for housing loan, details for other benefits claimed)

Employees should sign Form No. 12BB with the declaration that the information provided is complete and correct, and submit the same to the employer along with the supporting documents.

You can take a look at the format of Form No. 12BB here.

Additional information to be provided in Form No. 24Q

A. Report landlord PAN to the Income Tax Department

Currently, employees who wish to avail HRA exemption are required to submit the PAN of their landlord to the employer if the rent payment exceeds Rs 1 lakh in a year. Until now, employers were not required to submit information on landlord PAN to the Income Tax Department. From FY 2016-17 onwards, employers will have to report the PAN of the landlord in Annexure II of Form No. 24Q. In the entry numbered 357 in Form No. 24Q Annexure II, the following should be provided.

In case of House Rent Allowance claim-Name and Permanent Account Number of the landlord if aggregate payment during the previous year exceeds rupees one lakh

B. Report PAN of the housing loan lender to the Income Tax Department

If an employee wishes to seek interest deduction under Section 24 (on housing loan), the PAN of the loan provider, if available, should be reported to the Income Tax Department from now on. In the entry numbered 358 in Form No. 24Q Annexure II, the following should be provided.

In case of deduction of interest under the head “Income from House property” – Name and Permanent Account Number of the lender (if available)

Here are the PAN of some of the banks/financial institutions for your benefit.

Parting thoughts

1. According to the income tax rules, employees can submit a “No PAN” declaration from their landlord, if the landlord does not have PAN. The current format of Form No. 12BB does not refer to the No PAN declaration. The Income Tax Department would do well to clarify this.
2. In Annexure II of Form No. 24Q, we present one row of information for each employee. In case of an employee presenting more than one landlord/housing loan lender PAN due to the fact that the employee has paid rent to more than one landlord or taken housing loan from more than one lender, we are not sure how to enter the same in Form No. 24Q. We are also not sure if an entry should be made in Form No. 24Q in case of No PAN declaration from the landlord. We await the new format of Form No. 24Q to be notified by the Income Tax Department for clarity on this.
3. We find many payroll managers being undisciplined about collecting investment/expenditure proof from employees while finalizing tax calculations each year. Now that Form No. 12BB has been notified by the Income Tax Department, payroll managers would do well to ensure that they collect Form No. 12BB from employees at the time of final settlement processing for exiting employees and before the end of the year for active employees. In the event of a query from the Income Tax Department, employers may well have to submit Form No. 12BB for scrutiny.

Please check with your payroll software or service provider regarding Form No. 12BB after 01-June-2016.  Of course, if you are a customer of Hinote, we will make it available for you on our payroll portal – sorry, couldn’t resist that :D.