As the July 31, 2024 deadline to file your income tax return (ITR) for the assessment year 2024-25 nears, it’s important to prepare early to avoid last-minute stress.
A crucial document to be prepared with to avoid the hassle is Form 16 when filing the ITR. It stands as a vital document necessary for filing your income tax return for a specific financial year.
For individuals drawing a salary, this paperwork holds importance, as it lays out a clear breakdown of Tax Deducted at Source (TDS), summarising all earnings, encompassing salary, allowances, and perks throughout the financial year.
Read More: What should you do if your Form 16 data doesn’t match your ITR prefilled form?
When will Form 16 be issued?
The deadline for issuing Form 16 is set for June 15, 2024. In case your employer deducted TDS from April 2023 to March 2024, Form 16 must reach you no later than June 15, 2024.
Should you misplace your Form 16, a request for a duplicate can be made to your employer.
The overall deadline set by the Income Tax department for filing ITRs for the applicable financial year is July 31, unless extended by the government. Hence, receiving Form 16 by June 15 gives you precisely 45 days to file your tax returns.
Why is Form 16 important?
Form 16 holds immense importance because:
- It serves as evidence that the government has received the tax deducted by your employer.
- It facilitates the process of filing your income tax return with the Income Tax Department.
- It acts as proof of salary income.
- Many banks and financial institutions require Form 16 to verify a person’s credentials when applying for loans.
Read More: Income Tax Filing: 10 necessary guidelines that you must be aware of
Understanding Form 16
Form 16 comprises two main sections. Part A provides a summary of the tax deductions made by the employer on behalf of the employee, reported to the Income Tax Department. It displays the TDS deducted but does not cover the entirety of Form 16.
Part B delves into various financial aspects, including salary, deductions, and supplementary income of an employee. It amalgamates information from both employer and employee, offering a comprehensive financial outlook.
Both sections are indispensable for accurate compliance and documentation.
Read More: Income Tax Return: How to maximise your tax refunds while filing ITR?
Differentiating forms 16, 16A, and 16B
It’s essential not to confuse Form 16 with Form 16A. These forms are pivotal for taxpayers as they aid in calculating tax owed and are imperative for filing income tax returns.
– Form 16 confirms tax deduction from the employee’s salary and its remittance to the Income Tax Department.
– Form 16A, however, summarises tax deductions made by the employer and forwarded to the IT department on behalf of the employee.
– Form 16B provides a consolidated statement of various financial details related to an employee’s income.
Form 16 holds importance for banks and financial institutions when evaluating your financial standing for loans.
During job transitions within a financial year, obtaining Form 16 from each employer is crucial to accurately computing taxable salary.
Neglecting to inform your new employer about previous income could lead to tax discrepancies and penalties. Maintaining transparent communication and documentation with employers is pivotal to ensuring precise income assessment.
Form 16 plays a critical role in tax compliance and financial credibility, enabling accurate income reporting to tax authorities and preventing potential issues with tax liabilities and penalties.
