The ITR or Income-Tax Return is a crucial document under the Income-Tax Act 1961 which helps a person to gauge their assets and liabilities, prepare a report detailing their incomes, investments, and losses, and submit their taxes to the Tax Authorities. Under the Income-Tax Act, it is mandatory to file an ITR within the due date when the annual net income exceeds the basic threshold limit and any failure may result in legal consequences. For salaried individuals, it further becomes essential to file ITR with Form 16. But that doesn’t mean it is not possible without it right? Read further to know more-
Under section 203 of the Income-Tax Act 1961, Form 16 is a certificate issued by the organization to its personnel who are applicable for TDS deduction during a financial year. The certificate contains all the information such as the amount of compensation, total tax liability, applicable deductions and allowances the amount of TDS applicable, and the period for which taxes applicable, etc. among other required information are all included in the certificate. This acts as proof of the TDS submitted by the employer organization on the employee’s behalf. Further, it also enables the assessment of employee’s overall tax liability and filing of ITR. Employer organization must fulfill their responsibility to provide a certificate of Form 16 before the deadline for the FY 2023–24 (AY 2024–25) will be 15th June this year. Any failure on the part of the employer organization shall attract a penalty minimum of up to Rs. One hundred every day till the default continues or more, at the Assessing Officer's discretion.
Initially, it is imperative that the employee computes their paid income. To accomplish this, they can obtain salary proof from their employer organization which will have a detailed breakdown of his/her salary income comprising details such as gross income, the amount of prerequisites, professional tax, exemptions excluded from Section 10 tax, and all allowances.
In order to ensure there are no inconsistencies, the employee shall double-check the sum of the TDS deduction against the form 26AS under the Income-Tax Act 1961. Form 26AS offers information regarding the amount of taxes withheld (TDS) from all sources of income, including salary.
Next, if the employee has any rental income by letting his house property for which he/she will be eligible to receive a deduction provided certain conditions are met such as a loan taken for construction of the house property or payment of interest, etc.
Now, if the employee holds securities such as equity shares or mutual fund units and sells them after more than one year where the returns exceed Rs.1 L, then such income shall be income from capital gain or if the concerned individual holds income from other sources such as interest on bank savings, then such income shall be included under the Income from other sources.
After calculating income from all five heads, then the employee shall look out for deductions under sections 80C, 80D, and 80G with a certain limit that allows them to deduct expenses.
Finally, after calculating the ultimate taxable income, the employee shall subtract all the allowable deductions from their total income post which ITR could be filed by the employee without Form 16.
Therefore, Having Form 16 makes things easier, lowers the possibility of mistakes, and guarantees a hassle-free tax filing experience. However, it is not impossible to file ITR without form 16 with certain knowledge and practicing caution. It is important to note that holding the right documentation along with timely communication could be the easiest way to navigate ITR filling without Form 16 for any employee.
CA Nayani Agarwal
