Form 124 Under the Income Tax Act, 2025: Employee Declaration for TDS on Salary — A Comprehensive Guide

Introduction: The New Employee Declaration Framework

With the introduction of the Income Tax Act, 2025, several procedural forms governing tax deduction at source on salary income have been restructured and renumbered. One such significant change is the replacement of the familiar Form 12BB with the newly designated Form 124, which operates under Section 392(5)(b) of the Income Tax Act, 2025, read with Rule 205 of the Income Tax Rules, 2026.

This guide provides a thorough understanding of Form 124 — its purpose, structure, filing requirements, and practical implications — along with official FAQs issued by the Income Tax Department, Ministry of Finance, Government of India.

Cross-Reference: Old vs. New Statutory Framework

Before diving into the specifics of Form 124, it is important to understand how it maps to the older legislative framework:

This cross-mapping is essential for professionals, payroll administrators, and assessees transitioning from compliance practices under the Income Tax Act, 1961 to the new regime under the Income Tax Act, 2025.

What Is Form 124?

Form 124 is a formal declaration submitted by a salaried assessee to their employer. Its primary purpose is to enable the employer to account for legitimate tax reliefs — such as exemptions, deductions, and allowances — while computing the assessee's taxable salary and the corresponding Tax Deducted at Source (TDS) liability.

In essence, this form serves as the communication bridge between the employee and the employer's payroll or finance function, ensuring that TDS is computed on the actual net taxable income rather than on gross salary figures.

Important: Form 124 is governed by Section 392(5)(b) of the Income Tax Act, 2025 and Rule 205 of the Income Tax Rules, 2026. It replaces Form 12BB, which was operative under Rule 26C of the Income Tax Rules, 1962 corresponding to Section 192 of the Income Tax Act, 1961.

Who Should File Form 124?

Form 124 is required to be submitted by any salaried assessee who wishes their employer to factor in the following categories of tax benefits while deducting TDS from salary:

• House Rent Allowance (HRA) exemption
• Leave Travel Allowance/Concession (LTA/LTC) exemption
• Interest deduction on housing loan borrowings
• Deductions under Chapter VIII-A and Chapter VIII-B of the Income Tax Act, 2025, covering investments and specified expenditures

If the assessee does not submit this form, the employer is bound to deduct TDS on the full salary without applying any of the above reliefs, potentially resulting in excess tax deduction during the financial year.

Structure of Form 124: A Detailed Breakdown

Form 124 is divided into two primary components, each serving a distinct purpose:

Part A: Employee Particulars

This section captures the personal and professional identification details of the assessee, including:

• Full name and designation
• Current residential address
• Permanent Account Number (PAN)
• Contact details
• Applicable Tax Year

Note: The terminology "Assessment Year" and "Previous Year" as used under the Income Tax Act, 1961 has been replaced with "Tax Year" under the Income Tax Act, 2025. This change is uniformly reflected across all forms, including Form 124.

Part B: Tax Benefit Claims and Supporting Evidence