Form 12B

What is Form 12B?

Form 12B is an income tax form in India that needs to be furnished by an individual who joins a new organization or company in the middle of the financial year. The main purpose of this form is to provide details of the income earned by the individual from their previous employer.

Key Points About Form 12B:

• Purpose: To inform the new employer about the individual's previous income, TDS deducted, etc.

• Who needs to submit: Any individual joining a new organization mid-year.

• Information required: Details of salary, perquisites, allowances, TDS deducted, etc., from the previous employer.

• Not mandatory: While it's not mandatory to submit Form 12B, it's advisable to do so to ensure accurate TDS deduction by the new employer.

Why is Form 12B Important? 

• Efficient Tax Planning: By submitting Form 12B on time, you ensure that your new employer has the necessary information to calculate your TDS correctly. This can help you avoid any potential tax-related issues in the future.

• Faster Processing of Salary: Accurate and timely submission of Form 12B can streamline the salary processing process, ensuring that you receive your salary without any delays.

How to Fill Form 12B?

To complete Form 12B, provide the following details:

• Previous Organization Details: Include the name and location of your former employer.

• Tax Information: Record your PAN and the TAN of the prior employer, which is usually available on your pay stubs.

• Employment Duration: Specify the length of time you worked with the previous employer.

• Earnings and Pay Breakdown: Report the total earnings from the last fiscal year before joining your new organization. This should include components like House Rent Allowance (HRA), Dearness Allowance (DA), leave encashment and other benefits.

• Provident Fund Contributions: If applicable, include the amount credited to the provident fund.

• Deductions under Section 80C: Mention any deductible expenses, such as life insurance premiums.

• Tax Deductions: Note the overall tax deducted for the fiscal year.

• Annexure Details: The first annexure needs information on rent-free housing provided by the employer, specifying furnished or unfurnished status and any furnishing requirements. The second annexure should include additional benefits, like conveyance allowances.

Details Required in Form 12B

1. Employee Information:

   • Name: Full name of the employee.

   • PAN: Permanent Account Number of the employee.

2. Previous Employer Information:

   • Name: Name of the previous employer.

   • PAN/TAN: Permanent Account Number or Tax Deduction Account Number of the previous employer.

When Should You Submit Form 12B?

• Salaried Individuals: Salaried employees who switch jobs mid-year are required to submit Form 12B.

• Self-Employed Professionals: Self-employed professionals who transition to a full-time salaried position mid-year are not required to submit Form 12B.

What Happens After You Submit Form 12B?

After submitting Form 12B, your new employer will use the provided information to create a consolidated Form 16 at the end of the financial year. This consolidated Form 16 combines income details from both your past and present employment, ensuring accurate tax calculations.

It’s important to cross-check the income and Tax Deducted at Source (TDS) details on both the Form 16 issued by your previous employer and the consolidated Form 16 from your current employer. TDS amounts should align across both forms.

Remember, filling out Form 12B is your responsibility as the employee. Ensure that you submit both Form 12B and Form 16 from your previous employer for a smooth transition.

Difference Between Form 12B and Form 12BA

Forms 12B and 12BA are governed by Rule 26 of the Income Tax Act, but they serve different purposes:

1. Purpose:

   • Form 12B: Used when a salaried employee joins a new company mid-year. It is submitted by the employee to the new employer and includes details like previous salary income, TDS deductions, etc.

   • Form 12BA: The employer provides this form to the employee as a statement of all perquisites, profits, and other non-salary income received.

2. Responsibility:

   • Form 12B: The employee completes and submits this to the new employer for accurate tax calculation.

   • Form 12BA: The employer issues this to the employee, detailing the additional income and benefits beyond basic salary.

Conclusion

Form 12B serves as a useful tool for employees transitioning to a new job mid-year, offering a transparent record of their prior income and tax deductions. By providing this information to the new employer, employees can help ensure accurate tax calculations and avoid discrepancies in their tax filings. Although not mandatory, submitting Form 12B can simplify the tax assessment process and minimize the risk of over- or underpayment of taxes for the fiscal year.