If you are a salaried employee earning ₹2.5 Lakh or more, your employer deducts TDS from your income. You are also provided with Form 16, which is essentially the TDS certificate that entails the information and detailed summary of your income and tax deductions. This document is issued annually and includes the income details of the previous financial year. While filing your tax returns, Form 16 comes in handy, as it lets you claim tax refunds (if applicable).

Form 16 comprises two parts – Part A and Part B. It is important that you understand the usage of Part A, along with Form 10E, which will help streamline the tax filing process. In this article, we walk you through the different steps involved in filing income tax returns (ITR) using Form 16, while elucidating the importance of Form 16A and Form 10E.

Understanding Form 16

As previously mentioned, your employer issues Form 16, which includes your salary, tax deducted at source (TDS), and other related information for tax filing purposes. Form 16 acts as proof of income, along with the tax paid during the previous financial year.

How to Get Form 16

You must request your employer to provide Form 16, and employers are mandated by law to issue this document by June 15th of the next financial year. Moreover, it is important that you verify the details included in the document, as it has to match the employee’s records.

Important Details Mentioned in Form 16

Form 16 typically comprises two parts – Part A and Part B.

  • Form 16A: This document provides the TDS on non-salary payments. It includes details such as the employer’s Tax Deduction and Collection Account Number (TAN), your PAN, and a summary of the tax deducted and deposited by your employer.
  • Form 16B: The other part – Form 16B – provides a comprehensive breakdown of your salary, deductions, allowances, and tax payable, approved under Chapter VI-A. For example, Form 16B includes your gross salary, exemptions, and deductions under different sections of the Income Tax Act.

How to File Income Tax Returns Using Form 16

While filing your tax returns for the financial year, Form 16 helps you by simplifying the process. Here is how you can file your ITR using Form 16.

  • Step 1: Collect the following documents – Form 16, Form 16A, and other pertinent financial documents, such as investment proofs, Form 10E, and interest certificates. You should also identify the deductions you qualify for as per different sections.
  • Step 2: Visit the Income Tax Department’s e-filing portal. Register and create your account if you’ve never filed taxes before. Moreover, you must ensure that your PAN is linked to your Aadhaar Card before you start the filing process.
  • Step 3: Log in to the portal, and click ‘Income Tax Return’ to begin the filing procedure.
  • Step 4: Select the applicable ITR form, depending on your income and other factors. If you have your Form 16, you can choose either ITR-1 or ITR-2.
  • Step 5: Enter the relevant details, including your personal details, income information, deductions, and tax payments.
  • Step 6: Use your Form 16 to find details, such as:
    • Allowances that are exempted under Section 10
    • The break-up of deductions under Section 16
    • Taxable salary
    • Income or admissible loss from house property reported by you – and offered to you for TDS
    • The break-up of deductions under Section 80C
    • Income under ‘Other Sources’ offered for TDS
    • The gross and deductible amounts under Section 80C
    • Tax payable or refund due
  • Step 7: Verify the information provided in the form and submit the ITR.
  • Step 8: Once you submit the ITR, e-verify it through available options, such as Aadhaar OTP.

Importance of Form 16A

Other than your employer, Form 16A is issued by banks to reflect the TDS on non-salary income, such as interest on FDs, dividends, and rent. Form 16A serves as proof of tax deducted at source from these income streams and is required to accurately calculate taxes and file them properly. Thus, when filing your ITR, you must include details from Form 16A and other income sources to know your tax liability.

Importance of Form 10E

If you are claiming relief under Section 89(1) of the Income Tax Act, you must submit Form 10E. Section 89(1) allows you to avail of relief if/when you receive arrears or delayed payments (salary) during a financial year. Form 10E provides the necessary information for calculating this relief amount, and ensures accurate tax filing.

While filing your taxes, ensure you maintain proper documentation and verify the TDS details. You must also be vigilant about changes in income tax laws, exemptions, and deductions to maximise your tax benefits. If you are confused or unsure about the tax filing process, you can consult a chartered accountant or a tax professional to get expert guidance.

Final Thoughts

To maintain financial compliance, you must file your income tax returns using Form 16. You must understand the various aspects of Form 16, along with the importance of Form 16A and Form 10E, to seamlessly file your taxes. It is essential that you do your due diligence, collect all the relevant documents, and verify the information in Form 16 to file your taxes accurately. You can ensure a smooth and convenient income tax filing experience by following the steps mentioned above.