What Is the Meaning Of Form 12BA & Its Importance

What Is the Meaning Of Form 12BA & Its Importance

5-6 minutes

Form 12BA Definition

Form 12BA, in simple words, is an income tax statement that contains all the information about the perquisites, amenities, and other fringe benefits provided 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.

Now, to the uninitiated, Form 12BA is a very important document for both the employee and the employer.

Let''s dive in and learn everything about Form 12BA in one go!

But one needs to know what this form encompasses; therefore, before that, let''s get to know what exactly it is.

Form 12BA

This important document in income tax gives the summary of the advantages, provisions for amenities or fringe benefits, and other income in lieu of wages.

This form covers the entire range of non-monetary benefits received by any employee to correctly assess tax payments. Several factors comprising total salary can be found out by way of a personalized breakdown.

Purpose of Form 12BA

Form 12BA has been introduced to break down diversified pieces of income from the salary head to make the taxation process easier for employees.

Such income has three components: salary/wages/pension/gratuity, perquisites, and profits in lieu of salary.

Perquisites or perks, as they are more commonly known, are given both in cash and kind. In the latter category comes, for instance, the reimbursement by a company of educational expenses of children of its employees. Start-ups often have to attend to other non-cash benefits like free accommodation for an unlimited period in rented houses they own while the champagne lasts as well.

Applicability of Form 12BA

Form 12BA is applicable in the case of a person receiving wage income. It may provide information beyond what''s reflected in Form 16.

Both Form 16 and Form 12BA include employer salary details and TDS, and details of perquisites.

These are absolutely necessary documents while computing the tax liability and furnishing an Income Tax Return under Indian income taxation law.

Form 12BA, in this regard, applies to every employee irrespective of whether they receive perquisites or not.

Even people who do not have any perquisites need to obtain a Form 12BA from their employer with a declaration that they have not been provided with any perquisites.

This all-inclusive method of operation brings about compliance to the tax laws and transparent reporting, giving the full picture of the financial circumstances of any person during his income tax assessment.

Form 12BA vs Form 12B

Contrary to what their names may indicate, Form 12BA and Form 12B both have very different objectives when it comes to income tax documentation.

This is where people get it all wrong, but Form 12B kicks in when someone changes jobs within a financial year. Income details have to be collated for both the previous job and immediate new employment.

This form would aid the handoff from the old job to the new employer in a seamless way.

On the other hand, Form 12BA goes into details of perks, facilities, and fringe benefits provided by the employer to employees.

While Form 12B is more about interim changes in employment, Form 12BA takes a look at these enhancements that 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.

How to Fill the Form 12BA?

The step-to-step process for filling the form 12BA is as follows:

1. Personal Information: Enter your name and Permanent Account Number. Also, do not forget to mention the Assessment Year for which you are filing income or making tax payments with this form.
2. Details of Employer: Elaborate on the details of the employer, including the full address and name of the employer. This will make sure that the place from where your income is will be identified accurately.
3. Salary Paid: You must elaborate on the various components totaling to your salary, the basic salary, and the allowances, and others in whatsoever form have been paid to you and shown by your employer. This portion helps to understand the basic structure of your income.
4. Value of Perquisites: List down all the perquisites received from the employer. It could be a monetary benefit such as school fees for children, or it may be non-monetary. Make no mistake about the value of each perquisite; be as accurate as possible so that correct assessments are made for income tax purposes.
5. Other Information: Accompanied by other benefits or facilities that your employer gives you, and these are not in the form of salary or perquisites. It could be anything, ranging from various types of benefits; be as extensive as you can in reporting.
6. Verification: The last section on the form is where you need to fill out, normally at the back. Here you verify that the information you provided and signed a declaration in your hands.
7. Submission: All you need to do after this is paste the information in it, and then send it back to your employer along with other tax-related documents which he may need for deduction at source.

Voila dab! That''s All That you need to know about Form 12BA!

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