New Format of Form 16 for FY 2024-25 – Check What’s New
With the approach of the new fiscal year from April 1, the taxpayers in the nation are proceeding to submit their previous year's income tax return. The filing forms are expected to be notified by the Income Tax Department for the financial year 2024-25, or Assessment Year 2025-26. For a smooth and error-free ITR filing procedure, it is mandated for the taxpayers to have all the required documents before the due date.
Form 16, which is issued by an employer to an employee, is the most significant document for salaried taxpayers. In a particular fiscal year, the same form comprises details pertinent to an employee's salary and the tax deducted at source (TDS). For employees and employers, it is important to understand Form 16 and its components, as it assists in precise ITR filing and ensures compliance with tax norms.
Simple to Understand About Form 16
Form 16 acts as proof that an employer has deducted the TDS from the salary of the employee and submitted it to the Income Tax Department. For an individual ITR filing, it is an important document as it has the information of the total income earned by the employee and the taxes paid.
For the concern where a person has switched jobs in a year, it is essential to collect Form 16 from each of the employers. The form is classified into two segments- Part A and Part B.
Form 16 Part A
The data of taxes deducted and deposited by the employer every quarter is been furnished under Part A. It comprises personal details such as the employee’s name, address, and Permanent Account Number (PAN), including the employer’s Tax Deduction and Collection Account Number (TAN) and PAN. Part A provides reference to taxpayers to validate the tax deductions cited in their payslips.
Form 16 Part B
Part B is an annexure to Part A and provides a breakdown of the salary of the employee and the permitted deductions under distinct sections of the Income Tax Act. It mentions the exemptions u/s 10 (such as house rent allowance or other allowances) and particulars of deductions under Sections 80C and 80D, which contain life insurance premiums, health insurance premiums, and contributions to Public Provident Fund (PPF).
Significance of Form 16
Form 16 is crucial for ITR filing as well as plays a critical role when applying for loans. As proof of income, many financial institutions use Form 16, which helps in computing the eligibility for loans of the applicant. Also, Form 16 could be utlised to claim a refund for salaried individuals who have paid excess TDS. The same makes it an invaluable document to ensure precise tax payments and easier return filing.
Form 16 Amendment
The guidelines have been provided under the income tax department to file the returns are anticipated to be declared shortly; therefore, the taxpayers are recommended to stay updated on the process to prevent last-minute hassles.
Changes introduced by the tax department in the format of Form 16 related to tax deduction and perquisites need to be known to the salaried employees filing ITR every year. Form 16 amendments validated the data for different taxes, deductions, and exemptions on salary are specified more accurately.
Revisions Made in Form 16
Taxpayers shall access the insight information in the updated version of Form 16 compared to before. Earlier, only basic information was there in Form 16, though in the new version, it comprises comprehensive details. Taxpayers can now discover which allowances are waived from taxes, how much deduction was made, and which salary benefits are counted under the tax net. In filing ITR, it reduces the confusion, which makes the whole procedure transparent. With the help of SAGInfotech Gen Income Tax Software, you can easily generate Form 16 certificates.
With the start of the new tax filing season, comprehending such updates and holding all needed documents, particularly Form 16, shall make your process of filing easier and precise.