Form 67: All You Need to Know
Form 67 is a significant document required for claiming tax exemption by a salaried employee. In this blog, we will discuss the various aspects of Form 67 and its relevance to tax exemption.
What is Form 67?
Form 67 is a declaration by an employee for claiming tax relief under Section 89 of the Income Tax Act, 1961. This section permits the exemption of additional income tax, which arises due to the receipt of arrears or advance salary or both in a financial year.
Who should file Form 67?
Form 67 should be filed by an employee who receives an arrear payment or advance salary or both, which results in additional tax liability. The employee must file Form 67 at the time of filing his or her income tax return.
How to fill Form 67?
To fill Form 67, an employee must follow these steps:
Step 1: Provide personal details such as name, address, and PAN card number.
Step 2: Mention the financial year for which the form is being filed.
Step 3: Provide details of salary received in the relevant financial year.
Step 4: Provide details of arrears received and the financial year to which the arrears relate.
Step 5: Calculate tax payable on the total income, including arrears, and tax payable on the income without arrears.
Step 6: Provide details of relief available under Section 89 of the Income Tax Act.
Step 7: Calculate the amount of relief to be claimed.
Step 8: Sign and submit the form to the employer for verification and further processing.
Important points to remember while filling Form 67
- The relief available under Section 89 is not automatic and must be claimed through Form 67.
- The relief can only be claimed if the arrears or advance salary is received in a financial year other than the year to which it relates.
- Relief is not available on arrears or advance salary that has been received on a regular basis.
- The relief can be claimed only by an individual or a Hindu Undivided Family (HUF).
Advantages of Form 67
Filing Form 67 has several advantages for an employee. By claiming relief under Section 89 of the Income Tax Act through this form, the employee can reduce their tax liability and avoid paying a higher amount of tax on the arrears or advance salary. Additionally, the relief can be claimed over a period of time and can be beneficial for employees who have received a substantial amount of arrears or advance salary. By filing Form 67, employees can also ensure that they comply with the income tax laws and avoid any penalties or fines.
Process of Verification and Processing
Once an employee fills out Form 67, the next step is verification and processing. The employee must submit the form to the employer for verification. The employer must then verify the details provided by the employee and calculate the relief amount to be claimed. Once the verification is complete, the employer must issue a certificate in Form 10E to the employee, certifying the relief amount. The employee must attach this certificate to their income tax return while filing it.
Consequences of Non-Filing of Form 67
Non-filing of Form 67 can have several consequences for an employee. Firstly, the employee may end up paying a higher amount of tax on the arrears or advance salary. Additionally, the employee may be penalized by the income tax department for non-compliance with the tax laws. The penalty can be up to 1% of the tax payable for each month of delay. Therefore, it is important for employees to ensure that they file Form 67 in a timely and accurate manner.
Cases where Form 67 can be used
Form 67 can be used in several cases where an employee has received arrears or advance salary, including:
- Promotion or increment: An employee who receives arrears due to a promotion or increment in salary can claim relief under Section 89.
- Retirement or resignation: An employee who receives arrears on retirement or resignation can claim relief under Section 89.
- Delayed payments: An employee who receives arrears due to delayed payments or settlement can claim relief under Section 89.
- Annual bonus or incentive: An employee who receives arrears in the form of an annual bonus or incentive can claim relief under Section 89.
By understanding the various cases where Form 67 can be used, employees can ensure that they claim the relief they are entitled to and avoid any unnecessary tax liabilities.
Limitations of Form 67
Although Form 67 is a useful document for claiming tax relief, it has certain limitations that employees should be aware of. These include:
- Limited to individuals and HUFs: Relief under Section 89 and Form 67 can only be claimed by individuals or Hindu Undivided Families (HUFs). Companies or firms are not eligible to claim relief under this section.
- Only applicable for arrears and advance salary: Relief under Section 89 and Form 67 can only be claimed for arrears or advance salary received in a financial year other than the year to which it relates.
- Must be filed within the specified timeframe: Form 67 must be filed within the specified timeframe, which is before filing the income tax return for the relevant financial year. Failure to file the form within the specified timeframe can result in penalties and fines.
Conclusion
Form 67 is an essential document that an employee must file while claiming tax relief under Section 89 of the Income Tax Act. It allows the employee to reduce their tax liability by providing relief for arrears or advance salary. By understanding the process of filling the form and the important points to remember, employees can ensure that they claim the relief they are entitled to and avoid any unnecessary tax liabilities.
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Frequently Asked Questions (FAQ’s)
Q1.) What is Form 67?
Form 67 is a form used for claiming relief under Section 89 of the Income Tax Act, which allows an employee to reduce their tax liability when they have received arrears or advance salary.
Q2.) Who is eligible to file Form 67?
Individuals and Hindu Undivided Families (HUFs) who have received arrears or advance salary can file Form 67 to claim relief under Section 89.
Q3.) When should Form 67 be filed?
Form 67 should be filed before filing the income tax return for the relevant financial year. It should be filed within the specified timeframe to avoid penalties and fines.
Q4.) Can Form 67 be filed online?
Yes, Form 67 can be filed online on the Income Tax Department’s e-filing portal.
Q5.) What documents are required for filing Form 67?
The employee must provide details of their salary, tax deducted at source (TDS), and arrears or advance salary received. They must also provide a certificate in Form 10E issued by their employer certifying the relief amount.
Q6.) How is relief calculated under Section 89?
Relief under Section 89 is calculated by comparing the tax payable on the employee’s total income, including the arrears or advance salary, with the tax payable on the employee’s total income without the arrears or advance salary. The difference between the two amounts is the relief amount.
Q7.) Is relief under Section 89 applicable for all arrears and advance salary received?
No, relief under Section 89 is only applicable for arrears or advance salary received in a financial year other than the year to which it relates.
Q8.) Can Form 67 be filed for previous financial years?
No, Form 67 cannot be filed for previous financial years. It can only be filed for the relevant financial year in which the arrears or advance salary was received.
Q9.) What is the penalty for non-filing of Form 67?
The penalty for non-filing of Form 67 is up to 1% of the tax payable for each month of delay, subject to a maximum of the tax payable.
Q10.) Can Form 67 be filed for arrears or advance salary received from a previous employer?
Yes, Form 67 can be filed for arrears or advance salary received from a previous employer, provided that the employee has the necessary details and certificate from the employer.
