Form 123 under the Income Tax Act 2025: Form 123 vs Form 12BA

Overview

Form 123 under the Income Tax Act 2025 is the statement employers issue to report taxable perquisites and other salary-related benefits provided to employees. It replaces the earlier Form 12BA under the Income-tax Act, 1961 while continuing the same reporting purpose under the new law. This blog explains who needs Form 123, when employers must issue it, what details it contains, and how it differs from the earlier Form 12BA.

What is Form 123 under the Income Tax Act 2025?

Form 123 is a statutory statement issued by employers to eligible employees for reporting taxable perquisites, fringe benefits, and profits in lieu of salary. Although the form number has changed under the Income-tax Act, 2025, its purpose remains largely the same as the earlier Form 12BA of Income Tax. Employers are required to issue Form 123 only where an employee’s annual salary exceeds ₹1,50,000, as prescribed under the Income-tax Rules.

What Details are Included in Form 123 of  Income Tax Act?

Form 123 under the Income Tax Act 2025 consists of two parts: Part A and Part B. Together, these sections provide information about the employer, employee, perquisites provided during the tax year, and the related tax deducted at source (TDS). At the end of Form 123, the employer signs a declaration confirming that all information provided in the form is accurate and complete.

Part A: Employer and Employee Details

Part A captures the basic information of both the employer and the employee.

Employer details include:

• Name
• Address
• PAN
• TAN
• Contact details

Employee details include:

• Name
• Designation
• PAN
• Type of employee (Director or person having substantial interest, where applicable)
• Income from salary other than perquisites
• Contact details

Part B: Valuation of Perquisites

Part B provides a detailed valuation of the perquisites, fringe benefits, amenities, and profits in lieu of salary provided by the employer. The value of each perquisite is determined in accordance with the prescribed Income tax Rules and is considered for computing the employee’s taxable salary.

Details of Perquisites and Tax Information

Form 123 under the Income Tax Act 2025 contains the particulars of various perquisites, including:

• Accommodation
• Cars or other automotive facilities
• Sweeper, gardener, watchman, or personal attendant
• Gas, electricity, and water
• Interest-free or concessional loans
• Holiday expenses
• Free or concessional travel
• Free meals
• Free education
• Gifts and vouchers
• Credit card expenses
• Club expenses
• Use or transfer of movable assets
• Other benefits, amenities, or privileges
• Eligible start-up ESOPs and other stock options
• Employer’s contribution to specified funds or schemes
• Annual accretion by way of interest, dividend, or similar income
• Other taxable benefits or amenities

For each perquisite, the form specifies:

• Nature of the perquisite
• Value of the perquisite as per the rules
• Amount recovered from the employee, if any
• Amount chargeable to tax

It also includes details relating to tax deducted from salary, tax paid by the employer on behalf of the employee, total tax paid, and the date of payment into the Central Government account.

For the complete format and contents of the form, refer to the official Form No. 123 PDF issued by the Income Tax Department.

Employer Declaration

The form concludes with a declaration by the employer certifying that the particulars furnished in Form 123 are true and complete. The declaration must be signed by the authorised person responsible for issuing the form.

Key Differences Between Form 123 and Form 12BA

The biggest change is the renumbering of the form under the new Income tax Act, 2025. Apart from updated section numbers, rule references, and the form number itself, the reporting requirements and due date continue without any major change.

What are the Due Date and Filing Requirements for Form 123?

Employers must issue Form 123 under the Income Tax Act 2025 within the prescribed time limit and in accordance with the applicable Income tax Rules. Issuing the form on time allows employees to verify their taxable perquisites and report their salary income correctly while filing their Income Tax Return (ITR).

Due Date of Form 123 under the Income Tax Act

Form No. 123 must be issued to the employee on or before 30 April of the year following the relevant tax year.

Form No. 123 may be issued either manually or digitally, depending on the facility provided by the employer. It must be signed by the same person who is authorised to sign Form 130.

Filing Requirements of Form 123 under the Income Tax Act

• Form 123 is required to be issued only where applicable under the Income-tax Rules.
• It is issued in addition to Form 130 and does not replace the TDS certificate.
• If an error is identified after issuance, the employer may issue a revised Form 123.

Form 123 is not required to be attached or uploaded with the Income Tax Return (ITR). However, employees should preserve it for their records.

Issuing Form 123 under the Income Tax Act 2025 within the prescribed due date enables employees to verify the value of taxable perquisites, reconcile salary-related tax deductions, and accurately report salary income while filing their Income Tax Return. It also helps employers meet their statutory compliance requirements under the Income tax Act, 2025.

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Conclusion

Form 123 under the Income Tax Act 2025 replaces the earlier Form 12BA while continuing to serve the same purpose of reporting taxable perquisites and other salary-related benefits provided by employers. Where applicable, employers should issue Form 123 within the prescribed timeline so employees can correctly report their salary-related tax details and maintain proper tax records. Employees should keep a copy of Form 123 even after filing their Income Tax Return, as it can help verify salary-related tax details whenever required.

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