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When joining a new organization in the middle of a fiscal year, employees need to fill out Form 12B. This form informs the new employer about key income details of the employee from the previous employment. In this post, let us learn more about the 12B Form and its main features.
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Form 12B is an income tax form that discloses information about the individual’s income from their earlier employment/organization. This form must be furnished as per rule 26A of the Income Tax Act by the employee at the time of joining a new company in the middle of a financial year. The details in Form 12B include salary earned in the previous organization, TDS for the fiscal year, any perquisites, etc. Form 12B, thus, helps the new employer to deduct applicable TDS from the salary of the new employee for the remaining financial year. Further, the employee must also provide their investment proof (if any) for the financial year before 31st March of the FY. So, Form 12B concerns only the salaried employees in case they switch jobs in the middle of an FY.
As discussed, Form 12B discloses the income information of an employee at their previous organization when the person joins a new company in the middle of an FY. The form is submitted to the new employer, and it contains the following details:
Form 12B is important to both the new employer and the employee. It is important for the employees because they must submit Form 12B details and other information about their investment for the financial year before March 31st for deductions of TDS or Tax Deducted at Source. The employees are expected to file the details accurately to make the submission process quick and smooth.
On the other hand, Form 12B is important for employers because it contains details of the prior deductions and salary of the new employee, which is needed by the new employer to ensure further deductions during the year. Hence, form 12B is required for smooth and accurate deduction of TDS from the gross annual income of the new employee.
Below are the details required to be filled in Form 12B:
Form 12B Format features a form on the first page and annexures that the employee is required to fill out on the next page. The form generally contains 2 annexure pages beside the first page of the form.
Details on the provision of rent-free accommodation by the employer are required to be filled out in the first annexure, including information on both furnished and unfurnished apartments. On the other hand, information from the earlier employer, conveyance allowance, incentives, etc., are part of the next annexure.
Form 12B consists of the below fields that need to be filled by an employee:
All employees (salaried) should fill out Form 12B and submit it to their new employer if they switch jobs in the middle of a financial year.
Here, you may note that employees who were self-employed before taking up a salaried job do not need to submit Form 12B. So, this form applies to salaried employees only who change jobs to take up new employment opportunities during a fiscal year.
This helps the new employer calculate the new employee’s salary and accordingly deduct the applicable amount. However, you should also note that the previous employer may or may not offer their details to the new employer as they are not obliged to do so. Hence, in such cases, the employee may find the details from their payslips.
The new employer uses the accurate information offered by the new employee to the new employer in Form 12B to issue Form 16 in a consolidated format at the end of the financial year. The employee needs to verify the details available in Form 16 issued by the old as well as the new employer. There should be no discrepancy in Form 16, which might cause hassle in any tax-related issues later.
Irrespective of the fact that Form 12B and Form 12BA are both issued as per Rule 26A of the IT Act. But you may note that they serve different functions. Below is the key distinction between the two forms:
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Form 12B should be filled out by the employees. The employee must fill out Form 12B declaration as well as attach Form 16 (if offered by the previous employer)
The new employer is responsible for deducting TDS from employees' consolidated salary after calculating the TDS deducted by the earlier employer.
The employer may provide Form 16 to the employee after Form 12B is submitted per the details provided on Form 12B.
Form 12BA is an income tax form that is like a declaration by the employee on their profits, perquisites, and other benefits offered by the previous employer.
Form 12B download can be done from the official website of the Income Tax Department, among others.
It is an income tax form that is used by employees in India to declare investments and expenses they have made during the year, which makes them eligible for tax deductions. Hence, it is a claims statement declared by an employee for tax deduction u/s 192 of the IT Act.
Form 12BB is used to declare investments done by an employee during the year.
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