Meaning & Definition
Form 12B is a document used in India for reporting details of income received by an individual from a former employer when they switch jobs during a financial year. It is a part of the income tax regulations in India and is submitted to the new employer for the purpose of calculating and deducting taxes accurately.
Key points regarding Form 12B
Form 12B typically includes information about an employee’s previous employment, such as the name and address of the previous employer, the period of employment, salary details, allowances, perquisites, and deductions.
When a person changes jobs within the same financial year (April 1st to March 31st), the new employer needs to know the income and tax deductions of the employee’s previous job to calculate the correct amount of tax to be deducted at source (TDS) from the new salary. Form 12B is used to provide this information.
Form 12B is provided by the employee to the new employer. The employee must request their previous employer to issue a Form 12B that contains the necessary details. The new employer will use this information to calculate the TDS on the employee’s salary.
- TDS Calculation
The new employer will consider the income details and deductions from the previous employment as reported in Form 12B when calculating the total taxable income and TDS to be deducted from the salary. This helps ensure that the employee’s total tax liability is accurately assessed.
- Reporting to the Income Tax Department
The new employer will also report the TDS deductions to the Income Tax Department based on the information in Form 12B.
It’s important for employees to ensure that they receive Form 12B from their previous employer and submit it to their new employer promptly, as it can affect the calculation of TDS and their overall tax liability. Accurate and timely reporting through Form 12B helps in complying with income tax regulations and avoids the need for additional tax payments or refunds at the end of the financial year.