Form 12C

Form 12C was a document provided by the Income Tax Department in India. It allowed employees to declare their income from sources other than salary to their employer, helping the employer calculate tax deductions accurately under Section 192 (2B) of the Income Tax Act. However, Form 12C is no longer in use.

Purpose of Form 12C

• Enabled employees to declare income from other sources, such as rental or investment income.
• Helped employers consider additional income when deducting tax from an employee’s salary.
• Was primarily used to claim exemptions, like mortgage loan interest rebates.

Documents Required for Form 12C

To complete Form 12C when it was in use, employees needed to submit:

• Property ownership information: Proof of ownership or co-ownership.
• Details of property purchase or construction completion: The year when the property was purchased or constructed.
• Borrower information: The mortgage had to be in the employee's name or co-borrowed.
• Bank certificates: Proof of mortgage interest and principal paid.
• Municipal taxes: Proof of paid municipal taxes for the deduction from house property income.

Current Status of Form 12C

The Income Tax Department has discontinued the use of Form 12C. Employees are no longer required to submit this form to their employers.

By complying with legal guidelines, Form 12C helped ensure accurate tax deductions and provided a method for employees to report additional income sources for tax purposes. Although no longer required, it was an essential tool in the past for tax planning.

Note: For more information on current tax forms and exemptions, consult a tax professional or visit the official Income Tax Department website.

Frequently Asked Questions (FAQ)

Q. What is the alternative to Form 12C for declaring other sources of income now that it has been discontinued?

A. Since Form 12C is no longer in use, employees must directly report any additional income when filing their Income Tax Returns. This process ensures that all sources of income are accurately recorded for tax purposes. Employers are no longer responsible for deducting taxes based on other income sources, so the responsibility falls on the taxpayer. Therefore, employees should stay updated with the latest forms and guidelines provided by the Income Tax Department.

Q. How should employees report additional income sources to their employer or the Income Tax Department under current regulations?

A. Under current regulations, employees need to disclose their other income sources when filing their annual Income Tax Return (ITR). Employers now focus on deducting taxes based solely on salary income, leaving it up to the employee to report any additional income. Therefore, employees should gather all relevant documents, like interest certificates and property details, and file their ITR correctly. The ITR process has sections that allow easy reporting of different income streams.

Q. Are there any other forms or processes to claim deductions for mortgage interest and other financial rebates now that Form 12C is no longer in use?

A. Yes, you can still claim deductions for mortgage interest and other rebates when filing your Income Tax Return (ITR). Sections like 80C and 24(b) of the Income Tax Act allow for such claims, particularly for home loan interest. Therefore, employees should ensure that they have the necessary certificates from their bank or lender, which they can include in their ITR filing to receive the deductions. The Income Tax Department’s official website provides detailed guidance on how to claim these deductions without needing Form 12C.