When an employee files his/her income tax return, he/she is required to enter the details from Form 16 in the relevant fields in the income tax return form.
This allows the income tax department to match the tax paid by the employee with the tax deducted and submitted by the employer on the employee’s behalf, and thus ensure that there are no discrepancies between the tax paid and deducted.
It is important to have the original copy of Form 16, and employers have to issue this before the due date of filling the return.
Technically, Form 16 is a certificate issued by an employer to an employee that lists the total salary paid to the employee during a financial year, as well as the amount of tax that was withheld (deducted) from the employee’s salary by the employer.
Form 16 is important for an employee because it serves as proof of income and tax paid, and is required when an employee files his/her income tax return.
“The form contains important information, such as the employee’s permanent account number (PAN), the employer’s tax deduction and collection account number (TAN), and the employee’s salary details, including any deductions that have been made under various sections of the Income-tax Act, 1961,” says Suneel Dasari, founder, CEO, EZTax.in, an online income tax filing portal.
Things To Keep In Mind For Form16
Verify that the form is authentic: It is important to make sure that the form issued by your employer is correct in all respects, including the TAN and PAN number mentioned on the form, which should also match the employer’s details.
Check the dates on the form: The Form 16 should be for the financial year for which you are filing your income tax return. For example, if you are filing your return for the financial year 2022-2023, the form should have the dates April 1, 2022 to March 31, 2023.
Ensure the total amount of tax paid matches: The total amount of tax paid by the employer should match with the amount of tax paid by you. If there is a difference, reach out to your employer to clarify the discrepancy.
Check if all the deductions are mentioned: Make sure that all deductions, such as house rent allowance (HRA) and standard deduction, are included in the form.
Check details of all tax deductions: The form should have the details of all the tax deductions, such as those under Section 80C for investments in specified schemes, and 80D for medical insurance.
Keep the original copy: Keep the original copy of Form 16 safe, as that will help you file the return correctly.
Due date of filing: The Form 16 should be issued by your employer well in advance, so that you are able to file your return before the due date, which is usually July 31.
Things To Keep In Mind For Form 26AS
Form 26AS, also known as the annual statement, is a consolidated statement that contains details of the tax credit available to a taxpayer, as well as information on taxes that have been paid or deducted by various deductors, such as employer, banks, mutual funds, etc.
“The form is generated by the income tax department and is available to taxpayers through the tax credit statement (TRACES) portal,” says Rajiv Bajaj, chairman and managing director, Bajaj Capital.
Form 26AS has two parts – Part A and Part B.
Part A contains details of taxes that have been paid or deducted by various deductors, such as employers, banks, and other financial institutions. It includes information on taxes that have been deducted at source (TDS), as well as taxes that have been collected at source (TCS).
Part B contains information on taxes paid by the taxpayer through self-assessment or advance tax, as well as any refunds that have been issued to the taxpayer by the income tax department.
Importance of Form 26AS: It is important to check Form 26AS before filing the income tax return, as it contains important information that is required to be filled in the income tax return.
Adds Bajaj: “If there is any discrepancy between the TDS/TCS/advance tax as shown in Form 26AS and what is filled in the return, then it may lead to a notice from the income tax department for the same. It will also help the taxpayer to verify whether tax has been deducted by the employers or tax deductors, where one has multiple sources of income.”
