Form 12B - Types, Importance & Steps to File

Introduction

Changing jobs is a milestone event, a new role, a new office, and hopefully, a better salary. But amidst the excitement of joining a new organization, there is one crucial piece of paperwork that often gets ignored until the last minute: Form 12B.

If you have ever switched jobs in the middle of a financial year, you might have faced a nasty surprise during tax filing season: a demand notice from the Income Tax Department or a sudden, massive tax deduction from your March salary. This usually happens because your new employer did not know how much you earned at your previous job.

Form 12B is the bridge that connects your financial past with your present. It ensures your new employer has a complete picture of your earnings for the entire year, preventing double taxation or under-deduction of TDS. In this guide, we will explain everything you need to know about Form 12B, how it differs from Form 12BA, and the steps to file it correctly.

Table of Contents

1. What is Form 12B?
2. Who Needs to File Form 12B?
3. Importance of Form 12B for Salaried Employees
4. Form 12B vs Form 12BA: The Key Differences
5. Components of Form 12B
6. Step-by-Step Guide to Filing Form 12B
7. What Happens If You Don't Submit Form 12B?
8. Documents Required to Fill Form 12B
9. Can You Submit Form 12B Online?
10. FAQs

What is Form 12B?

Form 12B is an Income Tax statement under Rule 26A of the Income Tax Rules, 1962. It is a declaration submitted by an employee to their new employer when they join an organization in the middle of a financial year.

Its primary purpose is to inform the new employer about the income earned and the tax already deducted (TDS) by the previous employer. Based on this information, the new employer consolidates your total income for the year and calculates the remaining tax liability accurately.

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Who Needs to File Form 12B?

Form 12B applies strictly to Salaried Individuals.

• Scenario: You worked at Company A from April to September and joined Company B in October.
• Requirement: You must submit Form 12B to Company B.

If you are a freelancer or self-employed professional joining a full-time job, Form 12B is technically not applicable in the same way, as you did not have a "salary" from a previous employer. However, for any job switch between two salaried positions, this form is essential.

Importance of Form 12B for Salaried Employees

Why should you care about this form? Here is the math behind the compliance.

1. Preventing "Double Benefit" of Tax Slabs

The Income Tax Act grants a basic exemption limit (e.g., ₹3 Lakh under the New Regime).

• Without Form 12B: Your previous employer gave you this benefit. Your new employer, unaware of your past income, might also give you this benefit again.
• Result: You pay less tax monthly, but at the end of the year, you will owe a large sum (plus interest) to the government because you claimed the exemption twice.

2. Accurate TDS Deduction

By submitting Form 12B, your new employer can deduct the exact required tax every month. This saves you from the shock of seeing your entire salary vanish in TDS during the last months of the financial year (January to March) when the finance team finally reconciles the accounts.

Form 12B vs Form 12BA: The Key Differences

These two forms sound identical, but they serve completely different purposes.

• Form 12B:

  1. Who Files: The employee submits it to the new employer.
  2. Purpose: To declare previous salary income upon changing jobs.

• Form 12BA:

  1. Who Files: The employer issues it to the employee.
  2. Purpose: It is a statement of "Perquisites" (like car, accommodation, medical facilities). It acts as an annexure to Form 16.

Components of Form 12B

Form 12B is relatively simple but requires precise data. The key components include:

1. Employer Details: Name, PAN, and TAN of the previous employer.
2. Salary Structure: Breakdown of Basic Salary, Dearness Allowance (DA), House Rent Allowance (HRA), Leave Encashment, etc.
3. Deductions: Provident Fund (PF) contributions, Professional Tax paid.
4. TDS Details: Total tax deducted by the previous employer so far.
5. Allowances: Information on rent-free accommodation or other perquisites.

Step-by-Step Guide to Filing Form 12B

You do not need a Chartered Accountant to file this. Follow these steps:

Step 1: Collect Documents

Get your salary slips and the "Full and Final Settlement" statement from your previous employer. If they issued a Part-Year Form 16, that is even better.

Step 2: Fill Personal & Employer Details

Enter your Name, PAN, and the PAN/TAN of your previous company.

Step 3: Enter Income Details

Fill in the earnings column (Basic, HRA, Special Allowance) based on the salary slips. Be careful to enter the gross figures before deductions.

Step 4: Enter Deductions

Mention the PF deducted and the Professional Tax paid. If you have any ongoing housing loans or Section 80C investments declared to the previous employer, mention those too.

Step 5: Verify and Submit

Sign the declaration and submit it to your new HR or Payroll finance team.

What Happens If You Don't Submit Form 12B?

Submission of Form 12B is not legally mandatory for the employee, but it is highly recommended.

If you skip it:

1. Separate Form 16s: You will receive two Form 16s (one from the old job, one from the new).
2. Self-Consolidation: You will have to manually combine these incomes when filing your ITR.
3. Tax Due: You will likely face a tax payable situation at the end of the year because both employers gave you the benefit of the standard deduction and tax slabs.

Documents Required to Fill Form 12B

You don't need to attach these proofs (unless your new employer specifically asks), but you need them to fill in the data accurately:

• Salary Slips (Last 3 months).
• Final Settlement Statement.
• Proof of Investments (if you want the new employer to continue considering them).

Can You Submit Form 12B Online?

Yes. In 2025, most modern organizations use HRMS portals (like ZingHR, Keka, or Darwinbox).

• You typically do not need to fill out a physical paper form.
• You just log in to your new company's employee portal, go to the "Tax Declaration" or "Previous Employment" section, and enter the values digitally. This digital entry serves the purpose of Form 12B.