Form 124 Income Tax Act 2025 – Complete Guide for Salaried Employees

Form 124 is a statement that an employee declares to the company, containing all the exempt allowances, deductions and other exemptions applicable to them. The employer uses this statement to calculate the tax liability of employees, which is deducted as TDS from their salary

What is Form 124 Under the Income Tax Act 2025?

Form 124 is the investment submission made by a salaried employee to their employer to declare their tax-saving investments, allowances, and deductions. Based on this declaration, your employer calculates how much Tax Deducted at Source (TDS) to cut from your monthly salary.

Who Should File Form 124?

Taxpayers who want to claim the following deductions and exemptions need to submit Form 124.

Self-employed individuals, freelancers, and business owners are not required to file this form.

Is Filing Form 124 Mandatory?

No, Form 124 is not a mandatory requirement. Only the employees who want to consider the deductions and exemptions for salary TDS calculation can submit Form 124. If not submitted, your employer might deduct higher TDS, resulting in lower in-hand salary..

When should you submit Form 124?

There is no statutory deadline to submit your Form 124. However, it is recommended to submit Form 124 as early as possible to avoid excess TDS deduction.

Structure of Form 124

Unlike Form 12BB, Form 124 is divided into two parts. 

Part A: Employee Details

This part contains the basic details of the employee, as follows:

• Full name, designation, and address
• PAN and contact details
• Employer's name and address
• Tax Year (e.g., 2026-27)

Part B: Claims and Supporting Evidence

This part contains the eligible deductions, exemptions and tax-saving investments.

HRA (House Rent Allowance) exemption

The following are the declarations required
• Annual and monthly rent paid during the year

• Name, address, and PAN of the landlord (mandatory if rent > ₹1 lakh/year)

• Relationship of the tenant with the landlord

LTA (Leave Travel Allowance) 

For travel expenses during leave within India. Available for two journeys in a block of four calendar years.

Home loan interest due for the financial year

Disclose the following details:
• Name and address of the lender
• Interest amount paid/payable during the financial year

Chapter VIII-A and VIII-B investments (PPF, NPS, ELSS, insurance, etc.)

Quantum of deduction is declared along with supporting documents as annexures. Example - Premium receipts, mutual fund statements, investment certificates, etc.

Annexures

House rent agreement

1. Documents for Leave Travel Concession - tickets, invoices, etc.
2. Loan agreement 
3. Documents for deductions under Chapter VIII-A & B

Declaration

The employee submits a declaration stating that the details provided in the statement are correct to the best of their knowledge.

Aadhaar of the landlord is not compulsory unless your employer specifically requests it.

How to Submit Form 124?

Form 124 needs to be submitted to the employer. Since this declaration does not require submission directly to the income tax portal, there is no fixed procedure for submission. Depending on the organisation's policies and convenience, you can submit Form 124.

There are no penal consequences for not submitting Form 124. Your take-home pay will reduce due to increased TDS, resulting from not considering all the applicable deductions and exemptions. 

However, you can still claim those deductions while filing ITR, claiming the excess TDS deducted as a refund.

Key Differences Between Form 12BB and Form 124

Form 124 - When you change jobs Mid-Year

If you switch jobs during the financial year, you should submit Form 124 to the new employer to declare the deductions, and eventually reduce TDS implications. Submit your investment proofs along with Form 124 declaration as soon as possible for right TDS deduction.