Call this aachhe din (good days) for the employers and the salaried class. Employees will now be required to furnish tax benefit claim details (including documentary evidence) in a specified format to their employers. The CBDT’s newly specified form 12BB requires proofs to be submitted for tax benefits being claimed around house rent allowance, leave travel assistance, housing loan interest and financial savings.

The employers will be required to assess the evidence submitted by the employees and then accordingly decide the extent of tax that should be deducted at source from their salaries. The Income Tax Department’s statutory prescription (new form 12 BB) details the particulars of the evidence to be submitted to support the claims.

It’s not that employees were not furnishing this information to employers for deciding the tax deduction at source. The new development is that a statutory form has been prescribed spelling out the format of declaration and the details of evidence required to support the claims. The Central Board of Direct Taxes (CBDT) has now come out with a new rule 24C in the income tax rules requiring the assesses (employees) to furnish the evidence or particulars of claims for the purpose of computation of tax deduction at source.

The jury is still out on whether the tax department is covering new ground with this move in terms of widening tax base or tackling the menace of domestic black money in a big way, say tax experts. However, specifying a “statutory form” is going to ensure that only genuine claims of tax benefits are entertained, they added.

Move to bring consistency

Vikas Vasal, Partner Tax, KPMG in India, said that the aim is to bring in consistency in respect of the tax benefits being claimed and ensure that necessary documentary evidence, as prescribed, is maintained while making the claims.

Amit Singhania, Partner, Shardul Amarchand Mangaldas & Co, a law firm, said that the newly introduced form 12 BB would increase compliance burden on the part of the employer and employee.

However, at the same time, this will give a statutory prescription of furnishing of evidences by employees and may aid the employer in giving the benefit of exemption (tax benefits) to employees, he added.

Aseem Chawla, Partner, MPC Legal, said that the CBDT move is aimed at ensuring all round tax compliance where employer is able to deduct tax appropriately. This can happen when employees provide full and true disclosure of income, allowances and other relevant information necessary for computation of taxable income, he said.

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