As the filing season of income tax returns nears, the employees have to witness notable changes in the form of Form 16 for FY 2024-25. The new form will help in smooth filing of tax, more transparency, and convenient reconciliation of data by the employees and employers.
What is Form 16?
Form 16 is a yearly certificate provided by an employer to the salaried employees. It has information regarding the amount of salary drawn and tax deducted at source (TDS) paid on it for a financial year. Form 16 is a critical document while submitting ITR as it shows the actual income earned and tax paid to the government on behalf of an employee.
Form 16 has two crucial parts:
- Part A: It includes employer and employee information like PAN, TAN, address, service period, and quarterly TDS remitted to the Income Tax Department breakup
- Part B: It is an annexure of Part A and includes detailed salary breakup, exemptions, deductions under various sections (e.g., 80C, 80D, 80G), tax on income, and net tax payable.
What’s New in the Form 16 Format for FY 2024-25?
The Income Tax Department has altered the structure of Form 16 so that it would be simpler to calculate and file tax. The following are the new changes that have been incorporated in the new structure:
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Detailed Disclosure of Salary Components
In the new format, details of salary heads like Basic Pay, HRA, Special Allowances, Bonuses, Leave Travel Allowance (LTA), etc., allowances are given in more detail. This helps the employees to check their salary structure and compare it appropriately with their payslips.
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Itemised Exemptions under Section 10
Exemptions under Section 10, for example, HRA, LTA, and gratuity, will now be viewed in an even clearer sense. This makes it easier for the employees to understand how their tax-paying wage has been derived after taking all the exemptions eligible into account.
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Better Deduction Details
Chapter VI-A (Section 80C, Section 80D, Section 80E, etc.) allowances are now articulated in list and itemized manner. Every investment or eligible payment (e.g., LIC premium, EPF contribution, tuition fee, repayment of home loan principal, health insurance premium, etc.) will be itemized separately.
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Integration with New Tax Regime
The structure has been altered to accommodate the taxpayer’s choice to choose between the new and old tax regime. If an option is chosen for the new scheme, the corresponding deductions not available under the scheme are automatically ruled out with special provision of calculation of tax.
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Improved TDS Summary
The TDS component also now allows for simple quarter-wise division of the deducted and paid tax. This shall facilitate easy cross-verification with Form 26AS and AIS (Annual Information Statement) so that there is less discrepancy while filing ITR.
Why is the New Form 16 Format Important for ITR Filing?
With more focus on error-free and electronic filing of tax returns, the new format of Form 16 facilitates higher compliance and ease of filing. Here’s why the change is important:
- Ease of Filing: The more structured format is in line with the online ITR forms, minimizing the chances of mismatches or data entry errors.
- Correct Tax Computation: With salary, deduction, and exemption figures analyzed in detail, taxpayers will be able to compute their tax payable more correctly.
- Greater Clarity: Transparent disclosures enable easy detection of discrepancies, if any, and encourage employer responsibility.
- Greater Regime Comparison: Because the form now reflects deductions according to the selected regime, taxpayers are able to compare the new and old tax regimes appropriately.
Key Dates and Compliance
The employers have the statutory obligation of issuing Form 16 on or before June 15 of the subsequent financial year. Thus, for FY 2024-25, employees should receive Form 16 on or before June 15, 2025. It’s an important date to allow taxpayers sufficient time to check their accounts and submit their ITRs in due course before the date, normally July 31.
How to Utilize the New Form 16 for ITR Filing
- Cross-check PAN and personal information with your Form 16 to prevent mismatches at the time of filing.
- Cross-check salary elements and confirm they are consistent with your payslips and Form 26AS.
- Cross-check TDS amounts with the reported amounts in Form 26AS or AIS.
- Ensure deductions and exemptions are claimed and substantiated with proper documents.
- Select the proper tax regime while ITR filing as per the breakup provided.
Conclusion
New Form 16 updated for FY 2024-25 is a step forward by the Income Tax Department to make ITR filing more transparent, easy, and convenient. Salaried taxpayers will have to navigate their new Form 16 that will be made available to them and submit it accordingly in their returns. With greater transparency in tax regime applicability, deduction, and exemption, the reform can ease errors at filing time and compliance by all parties with ease.
Submit your ITR online seamlessly through Estartup. New taxpayer or salaried, rest assured of smooth and accurate filing with expert assistance. Get updated on the latest changes in Form 16. Avail Estartup today for easy and simple tax solutions based on your requirement.
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