If Form 16 is the basis for your tax filings, you must pay attention to this important thing. Since the Central Board of Direct Taxes (CBDT) made changes in Form 16, Form 16 is now much clearer and more detailed. The purpose of the decision is to prevent delivering false refunds and to collect the correct amount of tax.
It’s necessary to understand what changed, why it happened, and what difference it makes for your taxes.
What is Form 16?
Form 16 is released each year by employers to show the TDS deducted from an employee’s earnings. The document proves that you have earned money and paid taxes during the financial year, so that you can file your Income Tax Return confidently. Most of the time, employees get Form 16 near the middle of June for the previous financial year.
What’s New in the Revised Form 16?
Apart from May 12, 2019, the CBDT revised Form 16 by adding a detailed structure to its Part B, effective from April 1, 2019. The new system will be used for filing your returns from the financial year beginning in 2018-19.
- Provided Exemptions in Section 10
Section 10 allowances, such as HRA, LTA, and others, were given in one lump sum. Now, each tax-exempt allowance should be mentioned in the format, clearly defining its kind and the amount it covers.
- Income from Secondary Workplaces
People who switch jobs within one financial year now have to declare remuneration from their former jobs. The need for under-reporting is greatly decreased.
- Adding House Property Income to your earnings
now, in Form 16, all income from rent or other family property is clearly indicated when an employee declares it. It enables ITR data to be processed uniformly.
- Standard Deduction under Section 16
The standard deduction of ₹40,000 introduced in 2018 can now be found on the Form 16 under a separate heading. It explains more clearly the deductions that salaried people can take.
- List of Deductions Listed in Chapter VI-A
Earlier, all the deductions under sections 80C, 80D, 80G, 80E, and 80CCD were grouped together. Now, each of these items has to be explained by employers specifically, as required by the latest ITR forms.
- Some deals include rebates, and others charge surcharges.
Wherever relevant, details about Section 87A rebates and surcharges are included in the Form 16 now. This increases the accuracy with which the Income Tax Department verifies the final amount of tax to pay.
How These Changes Are Important
The main aim of revising Form 16 is to increase clarity and stop people from evading taxes. By looking closely at every income and deduction category:
- The department checks the stated salary and tax declarations provided with the ITR against what is on the user’s salary slips.
- If someone lies about their refund or their income, it is relatively simple to notice these things.
- Anyone earning a salary should pay special attention and make all their proofs and exemption claim forms accurate.
Outcomes for those on a Salaried Wage
Because of this change, tax filing will be more accurate and free of errors. Though keeping all records in order may take time, it can protect a business against mistakes and possible audits from the tax department.
Employees should not forget to:
- Be sure to hand in all proofs and statements related to your investment as per the guidelines.
- Compare the information from Form 16 with what is shown on the ITR form before filing.
- Get to know what type of property is being claimed as exempt.
Having the updated Form 16 will lower the possibility of taxes being evaded and protect taxpayers’ records. Salaried individuals ought to look at this change positively, since it is about paying taxes fairly and making earnings visible.
