If you are a salaried employee in India, you may have heard about different tax forms given by your employer. One such important document is Form No. 123, which deals with perquisites (extra benefits) you receive along with your salary.
Many people ignore this form because they focus only on salary, but this document plays a key role in correctly filing your Income Tax Return (ITR). Understanding it properly can help you avoid mistakes and gain clarity on how your benefits are taxed.
What is Form No. 123?
Form No. 123 is a statement issued by your employer that shows the value of perquisites, fringe benefits, and profits in lieu of salary provided to you during the financial year.
In simple terms, your salary is not just your monthly pay. It also includes benefits like a company car, accommodation, or free meals. This form captures all those extra benefits and their taxable value.
It acts as a supporting document while filing your ITR, helping you understand how much of these benefits are taxable.
Who receives Form No. 123?
This form is not issued to every employee. It is given only when your salary crosses a certain level. You will receive Form No. 123 if:
- Your annual salary is more than ₹1,50,000
- Your employer has provided you with taxable perquisites
The idea here is simple. When your salary and benefits increase, tax reporting becomes more detailed. This form ensures transparency.
When is Form No. 123 issued?
Timing is important because you need this form for tax filing. It is issued by the employer on or before 30th April of the next financial year. For example, for FY 2026–27, you will receive it by 30th April 2027.
This gives you enough time to review the details before filing your ITR.
What information is included in Form No. 123?
Form No. 123 is divided into two parts, and each part serves a clear purpose.
Part A – Basic Details
This section contains identification details.
- Employer details (Name, PAN, TAN, address)
- Employee details (Name, PAN, designation)
- Salary details excluding perquisites
This part is mainly for identification and basic salary structure.
Part B – Perquisites & Tax Details
This is the most important part because it shows the actual value of benefits.
- Type of perquisite
- Value as per tax rules
- Amount recovered from employee (if any)
- Taxable value of perquisite
- TDS details and tax payments
This section directly impacts your taxable income. After reviewing this part, you can clearly see how much extra income is added due to benefits.
What are perquisites included in Form No. 123?
Perquisites are benefits you receive from your employer apart from salary. These can be in cash or kind. Some common examples include:
- Company accommodation
- Car provided by employer
- Free electricity, water, or gas
- Interest-free or low-interest loans
- Free travel or holiday expenses
- Free meals
- Gifts or vouchers
- Credit card or club expenses
- ESOPs (stock options)
- Use or transfer of company assets
Now here’s the important part: Even if you don’t receive cash, these benefits still have a monetary value, and that value becomes taxable.
Is Form No. 123 mandatory?
Yes, it is mandatory in applicable cases.
If your salary crosses ₹1.5 lakh and you receive perquisites, your employer must issue this form. Even if you already receive a TDS certificate (like Form 130), this form is still required separately.
This ensures that both salary and benefits are properly reported.
Do you need to submit Form No. 123 while filing ITR?
No, you do not need to upload or attach this form with your Income Tax Return. However, you should:
- Keep it safely for records
- Use it while calculating income from salary
- Refer to it if there is any tax notice or mismatch
Think of it like a supporting document, not a submission requirement.
Can Form No. 123 be corrected?
Yes, mistakes can happen, and they can be fixed. If you notice any error:
- Inform your employer
- A revised Form No. 123 can be issued
It’s always better to check this form early instead of discovering errors during tax filing.
Is Form No. 123 applicable under the new tax regime?
Yes, it is applicable even under the new tax regime. This is because:
- Perquisites are still taxable
- Only deductions and exemptions change under the new regime
So, even if you opt for the new tax system, this form remains relevant.
Conclusion
Form No. 123 may look like just another document, but it plays an important role in understanding your real income. It shows that your salary is not just what you receive in your bank account, but also the benefits you enjoy from your employer.
If you take a few minutes to carefully read this form, you will get better clarity on your taxable income and avoid mistakes while filing your ITR. Over time, this small habit can make your financial understanding much stronger and more confident.
