Even though three months will be left before the closure of the current financial year 2025-26 in January, salaried employees should review Form 12BB to avoid higher TDS and reduction in take-home salary.
Why January matters for Form 12BB
Form 12BB is the declaration salaried employees submit to their employer, listing tax-saving investments and deductions such as Section 80C investments, health insurance under Section 80D, HRA claims, and home loan interest. Employers rely on this form to calculate salary TDS. Typically, January to March is when employers do a final TDS “true-up” for the year.
If Form 12BB is incomplete or not updated at this stage, employers are legally required to ignore unproven claims. The result: higher TDS in the last few months and avoidable pressure on monthly cash flow.
Rahul Charkha, Partner at Economic Laws Practice, points out that with the government’s NUDGE framework, alignment between what employers report in Form 16 and what employees file in their income-tax returns has become critical. “Any mismatch can trigger notices, scrutiny or delays in refunds. Reviewing Form 12BB early helps ensure consistency across Form 16, Form 26AS/AIS and the return,” he says.
Avoid last-minute tax pain
Checking Form 12BB in January still gives employees time to act. As CA Ruchika Bhagat, MD at Neeraj Bhagat & Co., explains, early review allows employees to complete pending tax-saving investments, submit rent receipts, home loan certificates or insurance proofs, and fully utilise available deductions. “Leaving this for March often leads to rushed decisions or missed benefits,” she notes.
It also helps capture mid-year life changes—job switches, new house rent, a fresh home loan, or new investments—that may otherwise go unreported.
New compliance, higher coordination
Form 12BB has gained added importance with the introduction of Form 12BAA, which allows employees to report TDS or TCS on non-salary income. Employers now need to factor this into salary TDS and report it accurately in Form 24Q and Form 16.
This raises the compliance bar for employers as well. Experts say closer coordination between HR, payroll, finance and legal teams is essential. Some organisations are even bringing in external tax consultants to review processes and guide employees.
