As the deadline for filing income tax returns (ITR) approaches, salaried employees will notice some major changes in Form 16 (a key document required for ITR filing).
The Central Board of Direct Taxes (CBDT) issued a notification on February 20 introducing a revised format for Form 16.
Please note that these changes apply to the FY 2024-25 (AY 2025-26). They will now be reflected as employers begin issuing the updated forms.
For those unaware, Form 16 is issued under Section 203 of the Income Tax Act. It is a certificate that shows the total salary paid to an employee and the amount of TDS during the year.
The new format is designed to make salary breakups more detailed and easier to understand. Now, taxpayers can easily match the details in Form 16 with their Annual Information Statement (AIS) and Form 26AS. This reduces the chances of mismatches and notices from the Income Tax Department.
Want to know more? In this guide, you will learn what Form 16 is and how to file Income Tax Returns online with Form 16. Also, we have covered the latest changes in Form 16 for filing ITR for FY 2024-25 and AY 2025-26.
Understanding Form 16
Before diving into the filing process, it’s essential to understand what Form 16 entails. Form 16 is divided into two parts: Part A and Part B.
- Part A includes details such as the employer’s and employee’s information (name, address, PAN, and TAN), the summary of tax deducted and deposited quarterly, and the employee’s PAN.
- Part B is an annexure with details of the employee’s salary break-up, deductions under Chapter VI-A, and any other income disclosed by the employee.
Form 16 is issued annually by the employer and is pivotal for filing ITR as it provides all the necessary details required for the return.
Form 16 for ITR filing for FY 2024-25: Top changes explained
Are you a salaried individual ready to file your ITR for the FY 2024-25 (AY 2025-26)? You must understand certain key changes made to Form 16. The recent updates in the tax rules and reporting requirements have made Form 16 more detailed. These changes have been made to:
Reduce filing errors
Improve transparency
Align Form 16 with other tax records like Form 26AS and AIS
For a better understanding, let’s check out the three major updates in Form 16 you must know:
1. Changes in Standard Deduction:
The standard deduction for salaried taxpayers has increased under the new tax regime. Earlier, it was Rs. 50,000. From FY 2024-25, it has been raised to Rs. 75,000. This change is only for those who opt for the new income tax regime.
If your employer has deducted TDS based on the new regime, Form 16 will show the increased Rs. 75,000 standard deduction. However, if you decide to switch to the old tax regime at the time of filing your return, then the deduction will be limited to Rs. 50,000.
Please note that the deduction amount directly reduces your taxable salary income. So, while filing your ITR, you should be aware of which tax regime you are choosing, as it will determine the allowable deduction shown in your Form 16.
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2. Taxes deducted from other incomes:
In a new update, Form 16 will now show tax deductions from sources other than salary, such as interest earned on fixed deposits. Additionally, it can show Tax Collected at Source (TCS) on specific expenses like foreign travel or overseas remittances.
However, this will happen only if you, as an employee, have submitted Form 12BBA to your employer. This change was introduced after the Union Budget 2024, which allowed salaried individuals to report their other taxable incomes and expenses (that are subject to TCS) to their employer.
Once reported, your employer can include these in the total tax computation while preparing Form 16. Such a declaration helps in:
Adjusting the overall TDS amount deducted from your salary and
Preventing excess tax deduction
However, if Form 12BBA is not submitted, your employer will only deduct tax based on your salary income, and you will have to report the rest during return filing.
3. NPS benefits:
Under Section 80CCD(2), employees can claim a deduction for their employer’s contribution to their National Pension System (NPS) account. Let’s see how the deduction varies in the two regimes:
New regime |
Old regime |
14% of the basic salary |
10% of the basic salary |
Now, the enhanced deduction (an additional 4%) will only be shown in the Form 16 for employees who have opted for the new regime. If the employee later switches to the old tax regime while filing the return, the deduction limit reduces to 10% of basic salary.
Step-by-step guide to filing ITR using Form 16
Follow the steps below to file your ITR with Form 16:
Step 1: Gather necessary documents
Before you start filing your ITR, gather all necessary documents, including:
- Form 16 from your employer
- Form 26AS (Tax Credit Statement)
- Salary slips
- Bank statements
- Proof of investments
- Deductions under Section 80C, 80D, etc.
- Home loan interest certificate, if applicable
Step 2: Log in to the income tax E-Filing portal
Visit the official Income Tax e-filing portal and log in using your User ID (PAN), password, and date of birth.
Step 3: Selection of ITR Form
Once you logged into your account, click on 'Filing of Income Tax Return' and select the correct ITR form. For salaried individuals, it's usually ITR-1 or ITR-2, depending upon income sources.
Step 4: Fill in personal information
Open the downloaded ITR form and start filling in your personal information, such as:
- Name
- PAN
- Address
- Date of birth
- Aadhaar number
Ensure that these details match those provided in your Form 16.
Step 5: Enter income details from Form 16
Refer to Part B of Form 16 to fill in the details of your income from salary. This includes:
- Gross salary
- Exempt allowances (like HRA, LTA)
- Net salary (after exemptions)
- Any other income (interest from savings account, etc.)
Step 6: Fill in the TDS details
From Part A of Form 16, fill in the Tax Deducted at Source (TDS) details. This includes:
- TAN of the employer
- Name of the employer
- TDS deducted and deposited
Step 7: Enter deductions and taxable income
Refer to Part B of Form 16 for details on deductions under Chapter VI-A, which includes:
- Section 80C (investments in PPF, NSC, etc.)
- Section 80D (medical insurance premium)
- Section 80E (interest on education loan)
- Section 80TTA (interest on savings account)
Calculate your total deductions and subtract them from your gross income to determine your taxable income.
Step 8: Verify tax paid and compute tax liability
Compare the details of tax deducted in Form 16 with your Form 26AS to ensure there are no discrepancies. Form 26AS is a consolidated tax statement that shows the details of tax deducted, collected, and paid during the year.
Compute your tax liability based on the taxable income. Use the tax slabs applicable for the financial year to calculate the tax payable.
Step 9: Pay additional tax (if any)
If there is any additional tax payable after considering the TDS and other tax credits, you can pay it online through the e-filing portal. Generate a Challan 280 and pay the tax.
Step 10: Fill in bank details
Provide your bank account details, including the account number and IFSC code, for any tax refund or communication from the Income Tax Department.
Step 11: E-verify your returns
After confirming all your details, submit the form. An acknowledgement number will be generated. Keep this number safely for future reference. Next, e-verify your returns using either Aadhaar OTP method, generating EVC through net-banking, or by sending a physical signed copy of the ITR-V to CPC, Bengaluru.
E-verifying your return is the final step in the filing process. It is crucial to complete this step to ensure your return is processed without delays.
Tips for accurate ITR filing
- Check for errors: Ensure that all personal details and income figures match the documents provided.
- Claim all deductions: Make sure to claim all eligible deductions under various sections to reduce your tax liability.
- Cross-verify with Form 26AS: Always cross-verify the TDS details in Form 16 with Form 26AS to avoid any discrepancies.
- Keep records: Maintain all supporting documents for investments, deductions, and other incomes in case of any future queries from the Income Tax Department.
- Timely filing: File your ITR before the deadline to avoid penalties and interest.
- Filing your ITR using Form 16 can be straightforward if you follow the step-by-step guide outlined above. Form 16 provides all the necessary information required for filing your return accurately. By understanding each section and ensuring all details are correctly filled, you can complete your ITR filing process smoothly. Remember to verify your return to complete the process and ensure it is processed on time.
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