Form 16 is a certificate issued by employers, giving details of an employee's TDS (tax deducted at source) paid to the government on his/her behalf. For the FY 2018-19, companies will be issuing the same by June 15. The form comes in handy while filing of the income tax return.
And while the newly revised form 16 is aimed at checking tax evasion, it can also be of help to taxpayers. Here we will stress on the topic:
New inclusions or changes made to the previous Form 16
Additional details included in the form:
1. Details of remuneration received from other employers
2. Income from house property
3. Deduction for various tax saving schemes
4. Different allowance in receipt of an employee such as HRA, LTA, pension, salary etc. Also if there is no space for disclosing such allowance in the Form 16, such allowance is required to be reported as ‘Total amount of any other exemption under section 10'
5. Investment into various tax saving scheme
6. Income from other sources
7. Deduction on interest on savings account
8. Surcharges and rebate wherever applicable
Notably the new revised form 16 will come into effect from May 12, 2019 and salaried individuals with income up to Rs. 50 lakh and income from one house property in the previous FY 2018-19 ( Assessment year: 2019-20) can file ITR 1 using the revised Form 16. The tax filing deadline for taxpayers is July 31, 2019.
What makes the new revised Form 16 helpful for taxpayers?
Because of the different provisions already being included in Form 16 now, salaried taxpayer will no longer need to adhere to advance tax payment dates nor will they need to worry regarding paying penalty or interest for making tax payment late.
When it comes to disclosure of information concerning income from other sources, it is still not made compulsory i.e. employees at their discretion can reveal this information to their respective employers.
And as the other information will need disclosure, salaried individual will no longer have to pay advance tax on such income sources and the employer after deducting TDS accordingly can submit the same with the government on an employee's behalf.
So, wherever the employee reports his other incomes to the employer it will be reported in Form 16 too.
Also, the newly introduced field in the form will help the tax department to reconcile everything electronically and thereby aid in check tax evasion.
Rationale behind the revision of Form 16
One of the Chartered Accountant has welcome the move to upgrade the form and is quoted in a business daily as saying, "Issuing of new Form 16 is a good move and the major reason for all these changes is to ensure that Form 16 is in sync with the ITR Form which will help the income tax department in electronically matching the data reported in ITR with all the data which it has gathered from various sources."
What will happen if prescribed format in Form 16 is not adhered to?
If there is any item which is not disclosed in the manner prescribed - the income tax department may not be able to reconcile everything and a notice may be issued electronically to explain the variance", adds the Chartered Accountant.