Are we mixing up a lot of taxes and their forms? That is just something natural that we can see pretty often, isn’t it? That is totally understandable, given that there is so much around in the market that we have to look into today. So, in this post, let’s look at the key differences between Form 12 B and 12 BA. So, let’s get started from the roots.
When employees leave their jobs and transfer to another organization in the midst of the fiscal year, the new employer demands certain information before paying their salary.
This includes details regarding the prior employer’s income, benefits, and tax deducted at source (TDS) throughout the fiscal year. Section 192 (2) of our Income Tax Act of 1961 deals with the papers needed to calculate the tax liabilities of employees who change jobs during the fiscal year.
Overview and Meaning of Form 12B
Form 12B – it is an income tax form that has to be submitted in accordance with Rule 26A. It is filled out by employees who transfer from one company to another in the midst of the fiscal year.
The major goal is to provide information about the employees’ past employers’ earnings. It enables new employers to deduct the correct amount of TDS from employees’ salaries for the remainder of the fiscal year. Any errors on this FormForm may result in increased tax liability for employees as well as difficulty for new employers in deducting the correct TDS.
Why is Form 12B Crucial?
The following are the key meanings of Form 12B for the new manager and representative:
For the employee
When they present this Form , new managers can deduct the exact amount of TDS from their remuneration, limiting the possibility of differences.
In particular, new employees must submit it along with other proof of venture by March 31st. Prior to submitting it, they should precisely document it in order to complete the entire cycle in a less bulky manner.
It is required when you join another organization or association within the fiscal year for nuances of money earned from the previous group. You can request that your new supervisor give you form 12B, and you can complete the details from your pay stub. It can be profitable on the internet, and you can deliver the completed FormForm to the new manager.
For the employer
It is beneficial to the new boss since it contains nuances associated with the new representative’s previous remuneration and allowance. As a result, it supports managers in completing Form 16 with accurate information.
What is Included in Form 12B?
Because Form 12B is being sent to the new employer, it must be completed using the salary slips provided by the former company. This Form must include the following information.
- Details about previous employers, such as the tax account number (TAN) and permanent account number.
- Deductions under several parts of the Income Tax Act of 1961, including sections 80C, 80D, 80E, 80D, and 24.
- If applicable, professional tax has been paid.
- A full breakdown of the prior wage, including basic, dearness allowance (DA), perquisites, leave travel allowance (LTA), house rent allowance (HRA), and leave encashment, among other things.
- Deductions for rent-free housing and provident fund (PF), if applicable.
- Salary TDS deduction.
How is Form 12B Different from Form 12BA?
When you change jobs in the middle of the fiscal year, you must complete Form 12B, which includes information on the former company’s income and any tax deducted at source on that income. When you have joined in the middle of a fiscal year, a correction must be made in terms of consolidated income earned, and Form 16 from both employers is required.
Form 12BA is a detailed statement produced by the employer that contains all of the details on benefits received by an employee. Form 12BA, as well as Form 16, must be issued by the employer. Forms 12B and 12BA are both subject to Rule 26’s master circular.
Form 12BA can be downloaded at the Income Tax Department of India’s official website, incometaxindia.gov.in. It is accessible in pdf format and must be printed, filled out completely, and then submitted to your current job.
Where is Form 12BA Applied?
Every individual who earns a remuneration is required to complete Form 12BA. This is filed in conjunction with Form 16. Form 16 contains information about your income taxes, whereas Form 12BA contains information about the benefits provided by your employer. Form 12BA is simply supplementary paperwork that must be given for perquisites.
Form 12BA includes information on pay, bonuses, and commissions, as well as monetary and non-monetary perks.
Details on dearness allowance that does not enter into the computation of the concerned employee’s superannuation or retirement benefits, employer’s contribution to provident fund, exempt allowances, the value of perquisites, and payments specifically excluded from being considered as perquisites. The lump-sum payments received at the time of termination of service, voluntary retirement, or superannuation, such as gratuity, severance pay, leave encashment, and voluntary retrenchment benefits.
The Income Tax Act establishes procedures for determining the correct financial value of these benefits. The value of these payments is shown on Form 12BA, as well as the amount that is taxable for the individual employed to receive these benefits. Thus, Form 12BA is a supplement to Form 16 that employees get from their employer.
Part B of Form 16 already includes the ‘Value of Perquisites u / s17 (2) of the Income Tax Act section.
People who join another organization during the year must file Form 12b in accordance with Rule 26A. It is an income tax form that reveals information about a person’s previous earnings from a previous business. Each new employee must complete and submit Form 12b to their new manager. When issued by the previous company, the employee must fill out Form 12b along with Form 16. However, Form 12b equipment is not required.
Now that you know all this about Form 12 B and Form 12 BA, you will also know how it would make a difference and what you should be doing.