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ToggleWhen employees quit their job and move to another organisation in the middle of the financial year, the new employer requires certain details before paying their salaries.
This includes information about the income paid by the previous employer, perquisites, and tax deducted at source (TDS) during the financial year.
Section 192(2) of the Income Tax Act, 1961 is related to the documents required for calculating the tax liability of employees who change their jobs during the financial year.
Form 12B is an income tax form that must be submitted as per the guidelines of Rule 26A. It is submitted by employees who move from one company to another in the middle of a financial year.
The primary aim is to provide details of the income earned by the employees from their previous employers. It helps the new employers to deduct the right amount of TDS from the employees’ salaries for the remaining financial year.
Any mismatch in this form may result in higher tax liability for the employees and may also cause difficulties to the new employers in deducting the accurate TDS.
Because Form no. 12B is submitted to the new employer, it must be filled based on the salary slips given by the previous employer. The following details need to be included in this form.
For Employers
This form provides information about the new employees’ previous salaries and deductions. This allows the employers to generate Form 16 with the right details to avoid any issues later.
If an individual joined a new company in October 2024, he would have to submit this form to the new company for the period between April 1, 2024, and September 30, 2024.
Form 12B in Income Tax is important for the employees and the new employers. Here’s why:
For Employees
When employees submit this form to the new employer, they may rest assured that the right TDS will be deducted from their salaries for the remaining period during the financial year, which minimises the possibility of any discrepancies.
For Employers
This form provides information about the new employees’ previous salaries and deductions. This allows the employers to generate Form 16 with the right details to avoid any issues later.
It has to be submitted by all employees who change their jobs during the middle of the financial year. The form must be submitted to their new employers at the time of changing employment.
However, if self-employed professionals take up a full-time job during the financial year, they are not required to submit this form to their new employers. It is applicable only for salaried individuals moving from one company to another.
The following points need to be completed while filling out this form.
The form also has two pages of annexures. The first part requires information about rent-free accommodation provided by the employers. This includes details of unfurnished and furnished accommodation including any furnishing perquisites.
The second annexure relates to information, such as conveyance allowance and other similar benefits from the previous employer.
Form 12B has to be submitted when salaried individuals change their jobs during the financial year. It comprises details of income earned from the earlier employer and the TDS deducted from these earnings.
On the other hand, Form 12BA is a detailed statement issued by the employer. Includes information related to the perquisites paid to the employees. It has to be issued along with Form 16.
Both these forms are regulated by the same master circular Rule 26.
The Form 12BA lists down any perquisites received by the employees from their employers and is issued along with Form 16. Some of these include bonuses and commissions, and other monetary and non-monetary perquisites.
The Income Tax Act, 1961 defines the rules for determining the value of these perquisites. This value is shown in Form 12BA along with the applicable tax on these perks.
It is important for employers to issue this form even if the employees do not receive any perquisites.
It is an income tax form submitted as per Rule 26A by a salaried individual while joining a new company in the middle of a financial year.
The primary purpose of this form is to provide information about the income earned from the previous employer. To know more about it, individuals may check a Form 12B example online.
Form 12BA is a detailed statement that lists down the particulars related to perquisites, profits, and other fringe benefits that employees receive from their employers. It is submitted along with Form 16.
The purpose of this income tax form is to ensure salaried individuals switching jobs during the financial year submit accurate details related to TDS deductions on the income earned from their previous employer.
Additionally, it assists the new employers to generate the consolidated Form 16 with the correct calculations.
The employee is responsible for completing this form and submitting it to the new employer. They have to fill in the declaration and also attach Form 16 received from their previous company.
It is the employer’s responsibility to deduct the applicable TDS on the employees’ consolidated income after taking into consideration any TDS deducted by the previous company.
Both these forms have different purposes but are often confused with each other. Here are the differences between the two.