Arjuna (Fictional Character) : Krishna, new format of Form 16 has been notified by CBDT, please throw some light on the same?
Krishna (Fictional Character):Arjuna, Form 16 is a certificate issued by an employer to employee evidencing details of salary and other income and the TDS which is deducted from salary and deposited with the Income Tax Department. Form 16, essentially has two components to it- Part A and Part B. Part A provides summary of tax deducted and deposited quarterly which is generated online through TRACES. Part B which is an annexure to Part A provides detailed breakup of salary and deductions and the same is issued offline. CBDT has notified new format for Part B of Form 16 on 12th April 2019.
Arjuna (Fictional Character): Krishna, please explain the changes in Form 16?
Krishna (Fictional Character): Arjuna, the changes in Form 16 are as follows-
Also, the amount of any other exemption under section 10 has to be mentioned quoting the relevant clause.
Any other section of Chapter VI-A have to mentioned quoting the respective section.
Arjuna: Krishna, what Employee need to take care of?
Krishna: Arjuna, now employees need to provide details along with supporting of all expenditures and investments for claiming allowances and deductions to their employer so that the same are properly reflected in Form 16. For e.g. travelling tickets, etc for claiming LTA exemption, LIC receipts, children school fees receipts, etc. for claiming deduction u/s 80C. If the details are not reflected in Form 16 and directly claimed in return of income, then discrepancy will arise which may initiate inquiry.
Arjuna: Krishna, what employer need to take care of?
Krishna: Arjuna, employer should verify the documents and details provided by the employee and examine the allowability of exemptions and deductions as per Income tax rules. The employer has been put in the place of Assessing officer for determining the taxable income and tax payable by the employee.
Arjuna: Krishna, what will be the impact of these changes in Form 16?
Krishna: Arjuna, some of the above changes have been made in line with amendments made in Income Tax Act while some are introduced to bring uniformity in reporting exemptions and deductions reported in Form 16. The Department will be able to cross verify the Incomes and Deductions reported in ITR, Form 16 and Form 24Q and can spot the discrepancy if any. Therefore, the employees need to provide proper details of deductions and exemptions to be claimed along with other income for proper deductions of TDS and reporting. Employer also need to maintain proper record of employee along with their supportings.