Income Tax Declaration Form: Everything You Need to Know

Income Tax Declaration has a direct connection to your investments, i.e. declaring your investment strategy in the beginning of the year can help your employer with ascertaining your tax liabilities. So, when we talk of tax declaration, we are simply talking about a list of all the investments that you’re proposing to make in the financial year that shall help in tax-savings. This facilitates the employer to correctly calculate TDS for each month.

An income tax declaration form is a document you submit to your employer, typically at the start of the financial year. In the old tax regime, it’s where you list all your expected tax-saving investments and expenses, like life insurance premiums or home loan interest. This forecast helps your employer calculate how much TDS to deduct from your monthly salary. If you opt for the new tax regime, most of these deductions, such as 80C and 80C don’t apply.

For example, if you plan to invest in PPF, ELSS, or life insurance under Section 80C (old regime only), you declare this in advance so that excess tax isn’t deducted. Later in the year, you’ll need to submit proof of these investments to confirm your claims. Under the new tax regime, standard deductions like 80C are typically unavailable, so you would not need to declare them for TDS reduction.

Without an income tax declaration form, your employer won’t have details on your 80C investments, health insurance (80D), or other deductions, if you’re under the old tax regime. This might lead them to apply a larger TDS on your salary, reducing your monthly take-home pay. If you’ve chosen the new tax regime, you generally won’t get these deductions, so your TDS might remain higher unless there are limited exceptions (like the standard deduction for salary earners, if applicable).

When you declare your potential investments and deductions early on, your employer uses that info to fine-tune TDS each month. That keeps your net salary at a consistent level, and you don’t have to wait until tax-filing season to correct an over-deduction. Plus, the form is a handy checklist. It prompts you to plan your investments.

Form 12BB is the official income tax form which is to be provided by the employee to their employer. 12BB contains the details of HRA, LTC, tax-saving claims or deductions on eligible investments made and so on, for employer to be able to calculate the TDS or the Tax Deducted at Source.

Employers use Form 12BB to verify the declared deductions before finalising TDS deductions from salaries. If an employee fails to submit this form, they may face higher TDS deductions, which can only be adjusted while filing an income tax return.

This form should generally be submitted towards the end of the financial year, which is January or February, mostly. However, since Form 12BB is to be submitted to the employer and not the tax department directly, the deadline for submitting the Form 12BB may vary slightly, as per the employer requirements.

A typical income tax declaration form (Form 12BB) captures these critical elements:

• Personal Information: Your name, PAN, and employee ID.
• Salary Breakdown: Basic salary, HRA, special allowances, and any other components.
• Proposed Deductions (Old Regime Only): Details of potential 80C investments like PPF, ELSS, or life insurance. Also include health insurance premiums under Section 80D, interest on home loans (Section 24), etc.
• Rent Details for HRA: If you claim House Rent Allowance, you need the landlord’s name, address, and PAN, if rent exceeds Rs. 1 lakh annually.
• Other Deductions: Charitable donations under Section 80G, interest on education loans under 80E, etc., are also relevant to the old regime primarily.

Employers use this information to compute their employee’s monthly TDS. If the form is incomplete or inaccurate, the default TDS might be calculated assuming no deductions. Under the new regime (which is also the default tax regime now), since major deductions usually don’t apply, your TDS might remain straightforward unless you opt back into the old regime.

Some companies provide a custom version for employees. If yours doesn’t, you can still get the official format in the following ways:

• 1. Head to the Income Tax Department website.
• 2. Check for ‘Form 12BB’ under the ‘Forms’ section.
• 3. Download the PDF and save it.
• 4. Fill it out—you can do this digitally or print and fill manually.
• 5. Submit it to your HR or accounts department.

Ensure every detail is accurate, especially your PAN, the expected investments (if following the old regime), and amounts.

If you’re following the old tax regime, the tax declaration form helps you inform your employer about all the deductions you plan on claiming. In the new tax regime, most of these are not allowed, except for a few limited benefits. Here’s a quick overview.

The employer takes the information from the form—like 80C or 80D deductions—and estimates your yearly taxable income, if you’ve chosen the old tax regime. Then, TDS is calculated monthly. If you’re under the new tax regime, these claims mostly aren’t applicable. Later, you’ll be required to present final proofs (like rent receipts or policy documents) to confirm your claims. If the actual numbers match your declaration, the TDS remains the same; if not, your employer will adjust the TDS in the final months.

Filing the declaration isn’t difficult. If you opt for the new tax regime (which is the default tax regime now), the form might just record basic information without listing these deductions. HR then adjusts your TDS accordingly. Follow the steps below for the old tax regime:

• 1. Obtain the form – Either from your HR or by downloading Form 12BB from the official site of Income Tax Department.
• 2. Enter your planned investments – Whether it’s an 80C investment, health insurance for 80D, or home loan interest under Section 24.
• 3. Attach preliminary proofs (if required) – Some employers want documents right away. Others wait until the year-end.
• 4. Submit to HR or the finance department – They’ll update your records.
• 5. Check your pay slips – Make sure your TDS deduction aligns with your declared investments.

One big mistake when filing the income tax declaration form is failing to specify which tax regime you’re following. If you want to claim multiple deductions, you must pick the old regime and fill in the details. If you prefer the new regime’s simplified structure, you won’t list 80C or 80D but might still declare certain allowances if allowed. A wrongly filled tax declaration form can result in higher tax deductions or compliance issues. Avoid these pitfalls by double-checking each declared item.

• Companies usually set a tax declaration last date. Missing it can result in higher TDS for the next few months.
• If you declare Rs. 1.5 lakh in 80C investment but actually invest only Rs. 1 lakh, your employer will do a recalculation, and the resulting difference will be adjusted in the final months.
• For HRA claims above Rs. 1 lakh in a year, your landlord’s PAN is mandatory. However, it is essential to submit the PAN, regardless of whether you are claiming the rent in full or part of your HRA exemption to ensure tax compliance. If it’s wrong or missing, your employer might reject the claim.
• If you forget to turn in receipts for insurance premiums or mutual fund statements later, your TDS might get revised upward.
• Sometimes, couples claim the same child’s tuition fee. This can lead to confusion and rejections.

If you skip the form entirely and choose the old tax regime, your employer might apply the maximum TDS as per your salary. Not submitting the tax declaration allows the employer to deduct tax on your behalf, thereby resulting in an increased tax liability and decreased net take home salary.

• You’ll be taxed without any deductions. So TDS can be significantly higher.
• Your monthly take-home pay drops. This can lead to cash flow issues in the short run.
• You’ll have to claim any refunds later through the ITR filing process. That means you wait until the financial year closes, including the time it takes for the refund to be processed

If you’re on the new regime, your TDS might be straightforward, but you’ll forgo all old-regime deductions. Either way, the outcome could be a reduced monthly salary if the calculation doesn’t factor in legitimate savings.

While 80C investment is the most common deduction, there are others to consider when you choose the old regime. But if you are going ahead with the new regime, you will not be able to apply for them.

• Section 80D: Premiums for health insurance, up to Rs. 25,000 (or Rs. 50,000 for senior citizens).
• Section 80E: Interest on education loans, unlimited in principle but actual interest only.
• Section 80G: Donations to registered charities or relief funds are eligible for a 100% deduction—some might qualify for a 50% deduction. The deduction is subject to conditions, like the donation nature or the charitable organisation.
• House Rent Allowance: Even if you’re living in a rented place, make sure you declare the rent for HRA. But note the rules regarding landlord PAN if rent crosses Rs. 1 lakh a year.
• Section 80TTA: Deduction on interest earned only from a savings account, up to Rs. 10,000. It is only applicable to individual taxpayers and Hindu Undivided Families (HUFs). Senior citizens are eligible for a more favourable deduction under Section 80TTB, which applies to interest earned on savings accounts, fixed deposits, and recurring deposits, with a limit of Rs. 50,000.
• NPS (Section 80CCD(1B)): Up to Rs. 50,000 extra beyond the usual 80C limit for those investing in the National Pension System.

If your TDS was higher than necessary, perhaps because you declared old regime deductions too late or forgot to mention them, simply file your ITR at the end of the year. For new-regime individuals who accidentally get old-regime TDS, you might have to rectify it while filing. Follow these steps to avoid confusion:

• 1. Gather Final Proofs: By the time you file your ITR, you should have the actual receipts for 80C or medical insurance, etc.
• 2. Check Form 26AS: This statement on the income tax site shows the TDS your employer deducted and deposited on your behalf. Compare it with your real tax liability based on actual investments.
• 3. File your ITR on time: Typically, the last date is 31st July. Declare your final figures accurately.
• 4. Calculate the Refund: If the TDS in Form 26AS is higher than your actual liability, you’re eligible for a refund
• 5. Submit the ITR: Once processed, the refund (plus any interest applicable) will come directly to your bank.
• 6. Track your Refund: The tax department usually processes refunds within a couple of months. You can check the status on the e-filing website or through the tax helpline.

Though a refund is good, having your money back earlier is better. That’s why submitting a tax declaration on time helps avoid over-deduction in the first place.