How to Fill an Income Tax* Return with Form 16?

14-June-2021 |

If you earn income in a financial year which exceeds the basic exemption limits, you are required to file an income tax return stating the income earned and the tax liability on such income. If you are a salaried employee, your employer will deduct TDS from your salary income and issue Form 16 to support such deductions. Form 16 becomes an important document when filing your income tax return. Do you know what the form is all about?

 

What is Form 16?

 

Form 16 is issued by employers. It contains the details of the TDS deducted from your salary income. It also states the salary breakup and exemptions allowed for the year. When you file your income tax returns, Form 16 can help you assess the TDS already deposited with the government on your behalf so that you can calculate your tax liability accordingly.

 

Employers issue Form 16 by the 15th of June, with the details of the salary income and TDS of the previous financial year.

 

Components of Form 16

 

Form 16 is divided into two parts - A and B. Part A contains the following details -

 

  • Employer’s name and address.

  • Employers TAN and PAN numbers.

  • Employee’s PAN number.

  • Summarized monthly TDS deductions.

 

Part B, on the other hand, is an annexure to Part A and contains the following information -

 

  • Salary breakup.

  • The breakup of the allowances exempted under Section 10 of the Income Tax Act, 1961.

  • Deductions claimed under Chapter VI A of the Act.

  • Tax reliefs under Section 89 of the Act.

 

How Form 16 helps in filing income tax* returns?

 

Form 16 can help you file your income tax returns correctly. Here’s why:

 

  • Form 16 contains the details of the tax already deposited on your behalf. Thus, when you calculate your tax liability, you can deduct the TDS and pay the remaining tax amount. Alternatively, if a higher TDS has been deposited, you can claim a tax refund.

  • You can verify whether the employer has allowed tax-exempt allowances and deductions from your salary income. If any deduction or exemption is left out, you can claim it in your return and save taxes.

  • Form 16 gives you the details of the PAN and TAN number of your employer you need when filing your income tax returns. Moreover, you can also check the challan number or the acknowledgement number of the TDS deposited with the government on your behalf.

  • You need various details from Form 16 while filing your returns. These details include the following:

    • Exempted allowances eligible under Section 10.

    • Available deductions under Section 16.

    • The taxable portion of your salary income.

    • The breakup and aggregate deductions under Section 80C.

    • Any other income, except salary, reported by the employer, on which TDS has been deducted thereon.

So, keeping Form 16 handy when filing income tax returns is important.

 

How to file income tax* returns with Form 16?

 

The facility to file income tax returns online is available. You can file your returns on the income tax department’s website easily. Keep Form 16 handy when filing your income tax returns. Here are the steps to file your returns online:

 

  • If you are a new taxpayer, register yourself on the income tax website. If you are an existing taxpayer, log in to your online account.

  • Now, generate Form 26AS. Form 26AS contains the TDS deducted from all sources of income. It is different from Form 16. While Form 16 shows TDS deductions only from your salary income, Form 26AS shows the TDS deductions from all sources of income, including salary. Therefore, you can verify the TDS deducted from your salary using Form 26AS.

    You can download Form 26AS through the TRACES website or from the income tax department’s website too.

  • Once you have Form 16 and Form 26AS, you need to download the relevant Income Tax Return Form (ITR) to file your tax returns. ITR-1 is used if your total income is up to ₹ 50 lakhs, while ITR-2 is used if your total income exceeds ₹ 50 lakhs.

  • List down your incomes in the Income Tax Return Form (ITR) and claim the available deductions or exemptions. Also, fill in the relevant details that include the TAN and PAN of your employer, assessment year, financial year, your name, PAN number, age and address, details of self-assessment or advance tax paid, if any, and your bank account details.

  • After you provide the details of your income and tax-free exemptions and deductions, your tax liability will be calculated automatically.

  • You can also check the additional tax payable or a tax refund you are eligible for.

  • Pay the additional tax through one of the online payment modes and submit your ITR.

  • Once you submit your return, the income tax verification form, ITR-V, will be generated. It is an income tax return acknowledgement generated online after tax filing.

  • You will have to e-verify your income tax return online, after which your tax return will be filed successfully. You can also check income tax return status online on the tax department’s website after filing your returns.

 

Form 16 from multiple employers

 

If you have switched jobs during a financial year, you are eligible to receive Form 16 from the previous employer as well. You will need Form 16 from all relevant employers to assess and file your income tax return.

 

Though not mandatory, Form 16 can help you calculate your tax liability correctly. You can also check whether deductions under Chapter VI A (Section 80C, 80D, 80TTA, etc.) have been properly included in the form. If not, you can claim these deductions and reduce your taxable liability. Section 80C allows deductions up to ₹ 1.5 lakhs, which can help you save up to ₹ 45,000 in taxes (if you are in the 30% tax bracket). For example, Tata AIA Life Insurance’s premium payments help you save taxes under Section 80C, along with life insurance coverage and a tool for retirement planning. Similarly, there are other avenues, too, using which you can reduce your tax liability.

 

So, if you are salaried, get Form 16 and file your returns with ease.

 

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  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you