Form 123 Income Tax Rules 2026 pdf download and Key points
FORM NO. 123
[See rule 204(2)(b)]
Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value
thereof
Under the new Income-tax Rules, 2026, Form No. 123 replaces the earlier Form 12BA. It is governed by Section 392(5)(a) of the Income-tax Act, 2025, and Rule 204(2) of the Income-tax Rules, 2026.
Here are all the key points regarding Form No. 123:
1. Purpose of the Form Form 123 is a statement issued by an employer to an employee that provides a detailed break-up of the value of perquisites, fringe benefits, amenities, and profits in lieu of salary provided during a financial year. It includes both monetary and non-monetary perquisites and serves to certify the perquisite valuation so the employee can accurately file their Income Tax Return (ITR).
2. Applicability (Who Issues It)
- Threshold: It is required to be issued by an employer to an employee only if the amount of salary paid or payable to that employee exceeds ₹1,50,000 per annum.
- Mandatory Nature: Wherever applicable, the issuance of Form 123 is mandatory under the tax rules. However, it is usually not required if the value of the perquisites provided is Nil.
- Relationship to Form 130: Form 123 must be issued in addition to the standard Certificate of Tax Deduction at Source (which is Form 130, formerly Form 16).
3. Frequency and Timelines
- Due Date: The employer must issue Form 123 to the employee by the 30th of April of the following year.
- Revisions: If a mistake is identified after issuance, the deductor (employer) is allowed to issue a revised (new) Form 123.
4. Mode of Issuance The form can be issued either manually or digitally, depending on the facilities provided by the employer. It must be signed by the same authorized person who is required to sign Form 130.
5. Structure of the Form The form is divided into two main parts and a tax details section:
- Part A (Personal Details): Captures the details of the employer (Name, Address, PAN, TAN, and Contact Details) and the details of the employee (Name, Designation, PAN, whether the employee is a Director or a person with substantial interest, their salary income excluding perquisites, and Contact Details).
- Part B (Valuation of Perquisites): Provides a detailed list of perquisites. For each perquisite, it states the value as per the rules, any amount recovered from the employee, and the final net amount chargeable to tax.
- Details of Tax: Includes the tax deducted from the employee’s salary under section 392(1), any tax paid by the employer on behalf of the employee under section 392(2)(a), the total tax paid, and the dates those payments were deposited into the Government treasury.
- Declaration: A certification by the employer that the particulars are true and complete.
6. Types of Perquisites Reported The form captures a wide range of perquisites, including but not limited to:
- Accommodation and Cars/automotive.
- Personal attendants (sweeper, gardener, watchman).
- Utilities (gas, electricity, water).
- Interest-free or concessional loans.
- Free meals, free education, holiday expenses, and free/concessional travel.
- Gifts, vouchers, credit card expenses, and club expenses.
- Stock options (ESOPs) and other eligible start-up stock options.
- Employer contributions to specified funds and the annual accretion (interest/dividends) to provident funds.
7. Post-Issuance Rules for the Employee
- No Upload Required: The employee does not need to attach or upload Form 123 when filing their return of income, but they must preserve it for their own records.
- Applicability in New Tax Regime: Form 123 continues to be fully applicable under the new concessional tax regime because perquisites remain taxable under the new regime.
8. Key Updates in the 2026 Rules
- Standardization: Taxpayer and deductor details (Name, Designation, Address, PAN, TAN) have been standardized into separate boxes to make the forms system-friendly.
- Terminology: The phrases “Assessment / Financial / Previous year” have been replaced universally with “Tax year“, and the currency symbol “Rs.” has been replaced with “₹”. References to sections and rules have also been updated to align with the new Income-tax Act, 2025.