Filing income tax returns (ITR) can seem intimidating for a lot of people. One might find the tax terms confusing and filing may feel like a complex process, leading you to seek professional help.
However, the tax authorities have now simplified tax filing for those are required to submit ITR-1 (Sahaj) for the financial year 2018-19 so that one can simply copy-paste their salary details from Form-16.
What has changed?
The ITR-1 form for the FY 2018-19 is synchronized in a way that it aligns with the details on the Form-16, that you can get from your employer.
Earlier, in filing returns for FY 2017-18, individual taxpayers were required to provide information in five rows, namely, Salary (excluding all allowances, perquisites and other benefits), Allowances not exempt, Value of perquisites, Profits in lieu of salary, Deduction under section 16.
The order and information were not in line with Form 16 and one required to refer their salary slips.
Further, taxable allowances were to be included in the ITR, however, the Form-16 only includes details on allowances exempt and not that are taxable. This made it difficult for salaried employees to report taxable parts.
Form-16 is an important document issued by your employer to you showing the TDS (tax deducted source) paid on your behalf. It will have a clear breakup of all the earnings you made from salary and other incentives along with how much tax was paid on those earnings by the employer against your PAN.
This time around to file your ITR-1 for FY 2018-19, the exempt part of allowances are required to be reported and not the taxable ones, making it easy for a taxpayer to file it using just the Form-16.
How to read your Form-16?
This document will be issued by the employer immediately after the end of a financial year for which the taxes were filed or usually before 15 June.
There are two parts in Form 16: Part A and Part B
This is auto-generated by the employer from the Income Tax department's official site. The correctness of the contents is checked by the employer before sending it to the employee.
If you were employed at more than one places in an FY, you will get Part A part of Form-16 from each employer for the period of service.
It includes employer's name, address, TAN and PAN along with a summary of taxes deducted and deposit on behalf of a certain employee on a quarterly basis. These details are required by the salaried individual to be included in ITR.
It is the annexure to Part A. If you have changed jobs during the year, it is up to you to decide if you want Part B from both the employers.
This part includes a detailed breakup of your salary, deductions under the income tax act and relief under section 89.
This is also the part you refer to fill the contents under "Income from salary" in the ITR 1 form:
- Salary (taxable)
- Deduction under section 80C (how much was the PF amount, insurance, etc)
- Deductions allowed on other incentives under various tax sections
Other details from Form-16
- Clearly specify deductions under section 16 from the form (it was not required last year)
- Standard deduction of Rs 40,000 is eligible for FY 2018-19
- Entertainment allowance is only applicable to government employees up to a maximum of Rs 5,000 or one-fifth of his/her salary (excluding allowances, perquisites, and other benefits)
- Professional tax or tax on employment that is allowed for deduction will be mentioned in Part B of Form-16