What is Form 12C ?
Form 12C was a form prescribed under the Income Tax Rules in India that allowed employees to declare income earned from sources other than salary, such as interest, rent, or other income, to their employer. This form helped employers calculate the employee's total taxable income and deduct the appropriate amount of Tax Deducted at Source (TDS).
Purpose of Form 12C:
To consolidate an employee's total income for accurate TDS calculation.
To declare income from non-salary sources to the employer.
Information Required in Form 12C:
Employee Details:
Name, address, and PAN (Permanent Account Number).
Income Details:
Type of income (e.g., interest from bank deposits, rental income).
Amount of income.
Any expenses or deductions applicable to the income (e.g., municipal taxes for rental income).
Usage of Form 12C:
Employees submitted this form to their employer, enabling the employer to consider additional income while calculating TDS on salary.
This was particularly useful for employees who wanted to avoid the burden of paying advance tax on income other than salary.
Current Relevance:
Form 12C is no longer in use. The system has been replaced by other mechanisms, and employees are now expected to report such income directly when filing their Income Tax Returns (ITR). Employers do not calculate TDS on income other than salary unless specifically required under current rules.
Key Takeaway:
While Form 12C is now obsolete, its purpose was to simplify tax compliance by consolidating salary and non-salary income at the employer level. Employees must now ensure they report all their income accurately in their income tax returns.