Form 12BA Definition
Form 12BA, in simpler words, is an income tax statement that includes every information of the perquisites, amenities and other fringe benefits offered by an organization as well as profits instead of salary.
There are several forms and documents that every organization is obliged to provide their employees with. One such form is form 12BA.
For the uninitiated, form 12BA is a vital document for employees and employers alike.
Let’s dive in and learn everything about form 12BA in one go!
Here, we will discover:
It is essential to know what is included in Form 12BA but before let’s know what it exactly is.
Form 12BA is a key income tax document that gives a summary of the advantages, provisions for amenities or fringe benefits and other income in lieu of wages.
In order to correctly assess tax payments, the form covers the full range of non-monetary benefits received by any employee. This way, various factors comprising total salary can be found out by way of personalized breakdown.
Form 12BA is meant to simplify the taxation process for employees by splitting into diversified pieces of income from the salary head.
Such income consists of three parts: salary/wages/pension/gratuity, perquisites, and profits in lieu of salary.
Perquisites, often called perks, include both cash and kind. For example, educational expenses are paid by a company on behalf of its employees. Startups frequently have to take care of other non-cash benefits such as free accommodation for an unlimited period in rented houses they own while the champagne lasts as well.
A Form 12BA is relevant to those who earn wage income. It can deliver information beyond what’s captured in Form 16.
Both Form 16 and Form 12BA contain employer salary details and TDS ( tax deducted at source ), and details of perquisites.
These documents are absolutely essential for calculating tax liability and making an Income Tax Return as per Indian income taxation law.
Form 12BA applies to all employees regardless of whether they get perquisites, which is important to keep in mind.
Even people without any perquisites must get a Form 12BA from their employer, bearing a declaration that they have not enjoyed any perquisites.
This all-inclusive method of operation ensures compliance with tax laws and transparent reporting, giving a full picture of one’s financial circumstances during income tax assessment.
Even if their names suggest otherwise, Form 12BA and Form 12B serve very different purposes in income tax documentation.
But here is where people get it wrong. Form 12B comes into the picture when an individual changes jobs within a financial year and Income details have to be collated for both the previous job as well as immediate new employment.
This form helps make the handoff of information from the former job to the new employer a smooth one.
On the other hand, Form 12BA goes into the details of perks, facilities and fringe benefits provided by the employer to employees.
While Form 12B is more about interim employment changes, Form 12BA takes a look at these enhancements, which exist beyond the wage contract and can be catered for in our overall model of how an individual’s income and lifestyle are for tax purposes.
Here is a step-to-step process for filling out the form 12BA:
1. Personal Information:
Enter your name and Permanent Account Number (PAN). Also, remember to fill in the Assessment Year for which you are filing income or make tax payments with this form.
2. Details of Employer:
Provide comprehensive information about your employer, including the complete address and name of the employer. This will ensure clear identification of where your income comes from.
3. Details of Salary Paid:
Break down your total salary into various components such as basic salary, allowances, and any other components specified by your employer. This section helps in understanding the basic structure of your income.
4. Value of Perquisites:
List all the perquisites received from your employer. It could be monetary benefits like school fees for children or non-monetary benefits. Make no mistake about the value of each prerequisite, be as accurate as possible so as to make correct assessments for income tax purposes.
5. Other Information:
If there are other benefits or amenities provided by your employer which do not fall under salary or perquisites. These could be anything from a wide range of benefits, so be comprehensive in your reporting.
6. Verification:
Complete the declaration and verification section at the back of the form. This usually confirms for example that the information given to you has signed a declaration.
7. Submission:
After placing the information there, send it back to your employer as well as any other tax-related documents that he may need in order to deduct at the source.
There you go!
That’s everything you must know about form 12BA!