The new financial year has already started on April 1 and if you are getting ready to file your Income Tax Return (ITR) for the year gone by, there’s something important you need to know. The Income Tax Department is expected to soon release the updated filing forms for the financial year 2024-25, or Assessment Year 2025-26.
Before you sit down to file your return, make sure you have all your important documents ready. One of the most important documents for salaried people for filing the ITR is Form 16.
Now let us understand what Form 16 is and whether it is going to be different this year.
WHAT IS FORM 16?
Form 16 is a certificate that an employer gives to an employee, which shows how much salary he earned and how much tax they deducted from it on the employee’s behalf. It’s proof that your taxes have been properly paid to the government.
If you changed jobs during the year, you must collect Form 16 from each employer you worked for.
Form 16 has two parts – Part A and Part B.
WHAT’S IN PART A OF FORM 16?
Part A has your basic details, like your name, address, PAN (Permanent Account Number), and your employer’s TAN (Tax Deduction and Collection Account Number).
It also shows the taxes your employer deducted and deposited with the government every quarter. You can match these numbers with the deductions shown on your salary slips.
WHAT’S IN PART B OF FORM 16?
Part B gives a complete breakdown of your salary. It shows the salary earned, exemptions under Section 10, like house rent allowance (HRA) and travel allowance. It also includes deductions under Sections 80C, 80D and others. For example, money you invested in PPF, insurance premiums, health insurance, etc.
This part is very helpful when you are filling out your ITR form.
WHY FORM 16 IS IMPORTANT?
Form 16 makes it much easier to file your income tax return correctly. If you have paid extra tax, you can use Form 16 to claim a refund. Banks and financial institutions also ask for Form 16 when you apply for a loan, as it proves your income.
WHAT’S NEW IN FORM 16 THIS YEAR?
The Income Tax Department is likely to release new return filing guidelines soon. Taxpayers are advised to stay alert to avoid any last-minute rush.
Those filing ITRs should also know that Form 16 has been revised to present details of taxes, deductions, and perquisites in a clearer way.
Earlier, Form 16 only had basic details. But now, it will show much more as to which salary components are tax-exempt, how much tax-free allowance you have got and which benefits have been taxed.
This detailed break-up will help you clearly understand your salary structure, deductions, and taxes. It will also reduce confusion when you file your return.
