Generally, individuals have to complete several formalities when deciding to join a new company in the middle of a financial year. Fundamentally, such formalities include the issuance and submission of multiple forms like Form 12B of Income Tax and documents to streamline the entire process. 

Nevertheless, there are a few crucial details that the new employees have to be aware of to credit salary to their new employers. To ensure the transition is smooth and there are no doubts about crediting salary and related taxes, individuals who intend to change their job must know how to avail Form 12B and fill the same accurately.  

What is Form 12B?

Fundamentally, it is an income tax form that is submitted as per the guidelines of Rule 26A. It is usually submitted by an individual who has joined a new company in the middle of a fiscal year. 

The primary objective is to provide details of the earnings generated by an individual from his/her previous organisation. One must note that a new employee is required to submit Form 12B to the new employer. 

Furthermore, it is the responsibility of the new employer to provide Form 12B to the new employee. However, one can initiate Form 12B download online and subsequently fill and submit it along with Form 16 to the new employer. However, furnishing Form 12B may not be compulsory in all cases. 

Components of Form 12B

It must be noted that the Form has to be filled on the basis of salary slips that were issued by previous organisations. Here is a list of information that is included in this Form. The primary components of Form 12B of Income Tax are given below –

  • Details of the previous organisation like TAN and PAN.
  • Details providing an accurate breakup of the previous salary including – dearness allowance, leave travel allowance, house rent allowance, perquisites, etc.
  • TDS deductions made on salary by the previous employer.
  • Professional tax is paid by employees in any given situation.
  • Applicable deductions under Section – 24(b), 80C, 80D, 80E, etc.
  • Deductions on rent-free accommodation and provident fund.

Notably, if an individual joined a new company in August 2018, then he/she has to submit previous income details pertaining to 1st April 2018 to July 2018.

Importance of Form 12B 

The primary significance of Form 12B for both the new employer and the employee are discussed below –

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  • For employers

It comes handy for the new employer as it contains details related to the new employee’s previous salary and deduction. In turn, it helps employers to generate Form 16 with correct information. 

  • For employee

When they submit this Form, new employers can deduct the precise amount of TDS from their salary and thus minimise the risk of discrepancies. 

Notably, new employees have to submit Form 12B along with other proof of investments before 31st March. Nonetheless, before submitting it, they should file it accurately to complete the entire process in a less cumbersome way.

How to Fill Form 12B?

These pointers below highlight how to fill Form 12B of Income Tax in brief –

  • Provide details like the name and full address of the previous employer.
  • Enter details like TAN and PAN of the last organisation from previous salary slips.
  • Mention the period of employment.
  • Provide details like income earned in a given fiscal year before joining the current company.
  • Provide details like dearness allowance, lease encashment, house rent, etc., in column 7.
  • Enter the amount of PF credited to the account number in column 8.
  • Add the amount in columns 6, 7, and 8 and enter the outcome in column 9.
  • Provide deduction details like – life insurance premium, PF, etc., that come under the purview of Section 80C.
  • Subsequently, fill the total tax deducted in a given fiscal year.

One must note that Form 12B includes two pages of annexures. Ideally, the first part requires providing details like – value of rent-free accommodation provided by the employer. Additionally, details of both unfurnished and furnished accommodations inclusive of perquisites of furnishings.  Furthermore, the second annexure is concerned with details like conveyance allowance or similar benefits provided by the previous company. 

Once employees submit Form 12B, their new employer issues a consolidated Form 16 based on the former’s details. However, it is often recommended to verify the details pertaining to income and TDS provided in forms issued by both the past and present employers. The amount of tax deducted at source in Form 16 should be the same as the amount mentioned in the Form issued by the current employer. This will help to eliminate the risks pertaining to discrepancies in terms of taxes. 

Difference between Form 12B and 12BA

Though Form 12BA and Form 12B are used for different purposes, individuals often confuse between them. This table below highlights the differences between Form 12B and 12BA –

Parameters  Form 12B Form 12BA
Detailed statement  It is a statement of income from salary. It is a detailed statement of perquisites. 
Issuance Employees provide Form 12B to their new employer to join the new job in the middle of a fiscal year. Employers issue this Form to their employees along with Form 16.
Components  This Form contains details like – income from salary, TDS deductions, etc. Form 12BA contains details of fringe benefits, profits and perquisites, etc., income from salary.

Besides becoming familiar with Form 12B, individuals should also make it a point to consider a few factors before switching a job. For instance, they declare their previous income correctly to their new employer.

Other than that, they should also declare their existing loans and details of deductions under Section 80. Above all, they should remember to collect Form 16 from their employer if they had been paying TDS on salary.