Tuesday, 13 March 2018

Understanding Income Tax Form 12 BA with Automated Master of Form 16 Part B with Form 12 BA for Financial Year 2017-18

For a person earning income from Salary, documents Form 16, and Form 12 BA  are provided by an employer which has details about his salary, perquisites, and tax deducted at source(TDS) by his employer. These are used while calculating Tax liability. Tax on income we looked into details of Form 16. Form 12 BA give details of Perquisites given by the employer to employee. In Perquisites, we had looked into what are perquisites, what income tax laws apply to it, about the valuation of perquisites and the taxation with an example, which perquisites are exempted from tax, Difference between Prerequisite, Allowance and Fringe benefit. In this article, we shall see how Form 12 BA shows the information about perquisites.

Form 12 BA

Form 12BA is the statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof. It comes under the Section 26A, subsection 2 point B.
Form No. 12BA, if the amount of salary paid or payable to the employee is more than one lakh and fifty thousand rupees, which shall accompany the return of income of the employee. [Explanation: “Salary” for the purposes of this rule shall have the same meaning as given in rule 3.]
 Note: The limit has changed to one lakh and eight thousand (1,80,000) by circular in 2011.

Please don’t confuse Form 12BA with Form 12B, the difference is more than just the one letter. Form 12B comes into picture when people change job in the middle of the Financial year. 
Details of previous employment to the new employer are provided by the employee in Form 12B.  Changing jobs often leads to a situation where an individual gets tax exemptions twice than what is due to him—from his earlier employer as well as from his new employer.  The income earned from the previous job has to be clubbed with the income from the new job to compute the total tax payable for the year. Changing Jobs: Take Care Of Bank Account, Tax Liability discusses it in detail.

According to section 192, it is the option/discretion of the employee whether or not to file Form No 12B. The current employer can’t insist on the filing of Form No 12B. If the employee chooses not to file, then employers’ obligation is limited to compute TDS on salary payable by him.

If Form 12B is filed, then the current employer can deduct the TDS on salary paid by the previous employer (in case no TDS was deducted by the previous employer). And if the TDS was deducted by the previous employer, any excess or shortfall can also be adjusted.

It is always in the interest of an employee to furnish such details because otherwise there can be the duplication of exemptions and deductions and there can be a shortfall in tax deduction and as a result, the employee would become liable to deposit advance tax.

Click to download Automated Master of Form 16 Part B with Form 12 BA for the FY 2017-18 [ This Excel Based Utility can prepare at a time 50 employees Form 16 Part B with 12 BA]


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