Claiming LTA,HRA,Home Loans Exemption-New Declaration Form 12BB released

In a recent amendment,the Income tax department has tightened the procedure for claiming tax exemptions and deductions by the salaried class. It was a common practice of employees to provide fake receipts to the employers for claiming various exemptions like LTA,LTC and HRA etc.

But,now CBDT has announced a new standard form 12 BB for the salaried employees claiming any of the exemptions like Leave Travel Allowance(LTA),Leave Travel Concessions(LTC),House Rent Allowance(HRA) and interest on home loans.

Earlier,the details were provided but not in a specified format.Also,some additional details have been asked to be furnished in the prescribed format.

Let us first clarify on :

HRA Exemption,LTA exemption,Home loans Deductions and Other Deductions…

1. Exemption of House Rent Allowance :

As an employee you might be receiving House Rent Allowance as a part of your salary package.So,if you stay in a rented accommodation you can claim an exemption U/s 10(13A) of Income tax act.

The exemption will be the least of following 3 amounts:

(i) Actual HRA received from employer

(ii) Rent paid-10% of Salary*

(iii) 50% of Basic salary(in metro cities) or 40% of Basic Salary (in non-metro cities)

*Salary here includes Basic pay + Dearness Allowance + Commission based on turnover.

For detailed analysis on HRA you can refer : House Rent Allowance : Rules,Calculation and Exemption !

2. Leave Travel Exemption (LTA) : 

An employee can claim LTA exemption U/s 10(5) of the Income tax act for travel alone or with family when he is on leave.It is limited to actual travel costs incurred by the employee within India only through the shortest possible route to the destination.Moreover,the travel cost does not include hotel stay and food expenses. LTA exemption can be claimed for 2 journeys in a block of 4 calendar years.

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Also go through our popular blog post : 7 Tax Saving tips for salaried class !

3. Interest on Home loan :

 You can claim income a tax exemption U/s 24(1)(vi) upto Rs.2 lakhs on interest paid on housing loan taken.The principal repayment of home loan if any,can be claimed as a deduction U/s 80 C.

To grab additional details on Home loans you can go through Home loans – 7 Facts You need to Know !

4. Deduction Under Chapter VI A :

You can claim Tax deductions under Chapter VI A by making certain Investments and hence reducing your tax liability.Tax Deduction Under Chapter VI A include Sec 80 C,Sec 80 CCC,Sec 80 D, Sec 80 U etc.

Also read : Tax Deduction U/s 80 C – Which are the 15 Eligible Investments ?

New Form 12BB to claim HRA,LTA,Home Loan Deductions and Other Deductions :

Now coming to the amendment part,Notification no.30/2016 regarding new form 12 BB, will come into force from 1st June 2016 .

Henceforth,all the salaried employees who want to claim LTA,LTC,HRA or interest on home loan exemptions,Tax deductions will furnish the particulars to their employers in the new form 12BB.

  • For those claiming LTA or LTCIn this case proof of travel has to be compulsorily submitted.
  • For claiming HRA exemptionFurnish Name,address and PAN of landlord if the rent paid exceeds Rs.1 lakh during the year.
  • Interest on home loan deductionIn order to claim the deduction for interest on home loan paid Under Section 24 (b)of the Income Tax Act, the Name,address and PAN of lender has to be furnished.
  • Deduction Under Chapter VI A :Further,an evidence of Investment or proof of expenses has to submitted for claiming the tax deductions under Chapter VI A that covers deduction U/s 80 C, U/s 80 CCC,U/s 80 CCD and U/s 80 E etc.
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The experts are of the opinion that it is a good step towards curbing practice of claiming tax exemptions on the basis of false receipts.This will make the task difficult for the employees who produce fake receipts in order to avail the tax benefits.

The same will also prove beneficial for the employers since it is a standard format wherein employees will furnish the details in the prescribed format.

Hence,the government is leaving no stone unturned in order to reduce tax evasion.The rules are getting stringent day by day leaving no scope for an EMPLOYEE to reduce his taxable income by unfair means.

You can download New Form 12BB below :

Download FORM NO.12BB – Word Format

Download FORM NO.12BB – Excel Format

Feel free to share your valuable feedback on the same !


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