What is Form 12B ?
- The employee who Switched the company from one company to other company within the fiscal year it is essence to provide prior income from previous employer to new employer.
- According to Rule 26A, an individual who joins a new employer in the middle of the year must submit Form 12B, an income tax form.
- The form’s primary use is to provide information about the person’s income from their prior Employer.
Details Contain in the Form 12B:
It is the responsible of the employee to fill the form 12B to the new employer for the computation of correct TDS deduction in new company.
The following information shall be contains in Form 12B for submitting the form to new employer:
- Information about the prior Employer, including Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) numbers, etc.
- It gives complete details segregation, such as the Basic Salary + DA, House Rent Allowance, Prerequisite, Leave Encashment, Leave Travel Allowance, and other similar components.
- Amount of Provident Fund which is deducted from Salary.
- Deduction of savings which are allowed by Income Tax Act like under section 80C, 80D, 80E and under section 24.
- Professional Tax paid by the employee after Tax Withheld at Source on Salary deducted by the prior Employer.
When Should Form 12B be Submitted?
All employees who change employment in the middle of the fiscal year are required to submit it. When they change jobs, the form need to submit it to the new employer.
Information Needed to fill in Form 12B:
While completing this form, the following fields must be filled out.
- Name and location of the previous organization.
- Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) for the prior Employer
- Period of employment
- Earnings made throughout the fiscal year previous to joining the new organization
- The pay breakdown includes HRA, DA, leave encashment, and other benefits.
- If applicable, the sum is credited to the provident fund.
- Deduction claimed under Section 80C include things like life insurance premiums, Tution Fees, House Loan Repayment etc.
- Tax deductions made overall for the fiscal year.
After Submission of the Form 12B:
- Once the employee gives Form 12B, the new Employer will use the information given by the new employee in Form 12B to generate a combined Form 16 at the end of the year.
- TDS should have been collected in the same amount on the previous Form 16 as on the consolidated Form 16 that is issued by the current Employer.
- Keep in mind that completing Form 12B is your responsibility as an employee, not the previous Employer’s. Both Form 12B and Form 16 from your previous job must be submitted.
Importance of Form 12B:
The following is a discussion of Form 12B’s main significance to the new Employer and employee-
For the Employee: By March 31st, new hires must provide Form 12B and other documentation of their investment. However, in order to make the entire process go more quickly, they should file it accurately before submitting it.
For the Employer: Given that it contains information about the new employee’s prior salary and deductions, it is helpful to the new Employer. As a result, it makes it easier for businesses to deduct TDS accurately from an employee’s annual gross pay.
