The Central Board of Direct Taxes (CBDT) via notification dated April 12, 2019, effective from May 12, 2019, revised the Form 16 format. Though, the structure of Form 16 largely remains the same (containing Part-A and Part-B), however, the information provided in it is much more detailed and extensive as compared to that in the previous years.
In addition to that, both parts of Form 16, i.e., Part A and Part B, have to be downloaded by your employer from the income tax department’s TRACES website only. This means that both parts of the form will be standardised for all employees. Further, both the parts will bear the TRACES logo.
‘TRACES’ stands for TDS Reconciliation Analysis and Correction Enabling System. It is a website where a PAN holder can view the taxes that have been deducted and deposited against his/her PAN during a financial year.
This year the last date to issue Form 16 by your employer has been extended to August 15, 2020 from usual deadline of June 15. If you are confused about what figures you should check in the revised Form 16, here’s everything you need to know.
What you must check in Form 16:
The first thing you must check in your Form 16 is that the PAN mentioned in the form matches with yours. Chartered Accountant, Naveen Wadhwa, DGM, Taxmann.com says, “In case PAN mentioned is wrong, then the tax deducted from your salary will not be reflected in your Form 26AS and you will not be able to claim credit for it while filing ITR.”
Form 26AS is your tax passbook. It consists of all the taxes that are deducted and deposited against your PAN by your employer, bank or any other entity. Any advance tax and self-assessment tax deposited by you against your PAN will also be reflected in your Form 26AS.
In addition to the above details, the Income Tax Department now will provide particulars of tax demands, refunds, all pending income tax proceedings, and proceedings which have been completed during the year. Further, information relating to “Specified Financial Transactions” (SFT) of the tax-payers shall also be shown in Form 26AS.
Part A of Form 16
The next thing to check is Part A of Form 16. It consists of the summary of taxes deducted by your employer. Part A consists of your name, address, PAN and your employer’s TAN and PAN and quarterly summary of taxes deducted and deposited with the government against your PAN in each quarter.
Part A also enables you to view the taxes deducted from your monthly salary. You can cross check these details with your salary slips.
Chartered accountants advise that it is important to match the tax deducted details shown in Part A of Form 16 with Form 26AS. Archit Gupta, CEO & founder, Cleartax.in, “TDS deducted and deposited which appears in Form 16 must be validated against TDS appearing in Form 26AS. Any discrepancy between your Form 16 and your Form26AS must be reported to the employer. Post rectification, your employer is required to issue you a revised TDS salary certificate.”
Part B of Form 16
Part B of Form 16 consists of the details of income paid to you by your employer. The income details given in Form 16 are detailed and extensive. The format in which details are required to be mentioned in the ITR 1 is same as given in Form 16. Therefore, taxpayers are required to just copy the details from Form 16 and paste it on the required fields of ITR 1.
If you file your ITR 1 online on the income tax e-filing website, then these details will be pre-filled. However, individuals must cross-check such pre-filled information with Form 16.
If you have switched jobs during FY 2019-20, then Form 16 may also contain details of the income paid to you by your previous employer. “If you have two Form 16s, check if the income from the previous employer is included in Form 16 given by a new employer. If not, then you have to include income details from both Form 16 while filing ITR and may have to pay additional tax”, says Gupta.
This year Form 16 will show detailed break-up of tax-saving deductions claimed by you in your investment declaration. “You should ensure that the tax saving deductions and exemptions claimed and related proofs submitted by you to your employer (to allow for when deducting tax at source from your salary) should be correctly reflected in Form 16. However, in case additional tax-saving investments are done by you at last-minute and therefore not accounted for by your employer while deducting TDS, then it is likely that those (tax saving deductions) might not be reflected in your Form-16. Remember, tax-savings investments made during the extended period i.e. between April and July 2020, may not reflect in your Form 16,” adds Wadhwa.
Wadhwa says, “The Part B of Form 16 shall be downloaded from TRACES. It will ensure that there is uniformity in the format of a TDS certificate issued by the employers. Now employees can verify the authenticity of the TDS certificate issued by the employer as Part B shall contain unique TDS certificate number and logo of TDS-CPC. The employees would also be able to check if exemptions or deductions reported to the employer have been considered at the time of calculation of TDS and filing of TDS return.”
The revised format also shows the detailed break-up of the tax-exempt allowances that are received by you. Wadhwa says, “In case of any discrepancies in the income details or tax-exempt portion of allowances, then you must bring it your employer’s notice and ask him for correct and revise Form 16.”
What you should do
Before you start filing your ITR, it is important to cross-check and verify the information available in Form 16 with your salary slips and Form 26AS. In case there is any discrepancy in the information available, then you must bring it your employer’s notice immediately and ask him to give you a revised Form 16 with the correct information.