To curb fake tax claims, the I-T department has made it compulsory to furnish proof of your expenditure with regard to home rent, travel, home loans. The Central Board of Direct Tax has issued a new Form 12BB which includes what details you have to furnish to claim your leave travel allowance (LTA), HRA and also deduction on interest with borrowed money.  “CBDT vide its Notification No. 30/2016-Income Tax dated 29-04-2016 has inserted new income tax rule 26C which requires every employee to furnish evidences of claims/deductions for salary TDS purpose in FORM 12BB under section 192 of the Income Tax Act, 1961.” 

The rules will be applicable from June 1, 2016.

The standard procedure which is followed now is:

In the beginning of the financial year, an employee has to furnish the Investment Declaration of tax. At the end of the financial year, the company asks its employees to give the proofs of the ‘declared’ investment made earlier in the year, and if the employee has failed to show proof of investments then the tax is deducted accordingly. With regard to HRA, the company used to only ask for PAN number of the landlord. It is in this area – the details – where the Government has introduced the new Form 12BB. During January to March, when the companies ask from you the investment proofs, it is then you have to provide every proof with the Form 12BB. The Form will have all the details relating to the relevant tax deductions made by an employee. The Form 12BB has four sections – HRA, LTC or LTA, Deduction on Interest on borrowing, and Deduction under Chapter VI-A.

While the taxpayers will have to furnish compulsory proof for claiming LTA and LTC benefits, employees will also need to provide details like name, address, and PAN number of the landlord (in case of HRA claims) if the aggregate rent paid is over Rs 1 lakh a year.  

For claiming deduction of interest on home loan, the name, address and PAN of the lender will have to be furnished. Evidence of investment or expenditure will have to be provided for claiming tax deduction under Chapter VI-A which relates to allowable deductions under various sections including Section 80C, Section 80CCC and Section 80CCD. Section 80C allows deductions up to Rs 1.5 lakhs on specified investments.