As the tax filing season comes to an end for individuals with salary income and non-audit cases, many are familiar with Form 16. This essential form is received from employers after the year-end and helps individuals file their income tax return (ITR) with the assistance of their Chartered Accountants. Form 16 is a statement that provides details of annual salary, interest on housing loans, other incomes, and deductions, similar to the ITR. It is closely related to Tax Deducted at Source (TDS), where employers deduct taxes from employees’ salary income and deposit it with the government. Employers also file TDS returns periodically and provide Part B statement, akin to an ITR, mentioning various income details of their employees.
The taxation system involves a concept called TDS (Tax Deducted at Source), which means deducting tax at the source while making payments above the threshold limit, as prescribed in various sections for different types of payments. For salaried individuals, if their total income exceeds the basic exemption limit, they will be liable to TDS on their salary income, which they can later claim while filing the ITR. So we got to know the term TDS. Your employer deduct tax from your salary income and pay it to the government exchequer. And after paying the same, they file the return in Form 24Q quarterly of the deductions made by them throughout the quarter and the payment made to the government exchequer. The employer is liable to deduct TDS on time and make the timely payment of the same, otherwise, there are penal consequences for it through interest (1% for late deduction and 1.50% for late payment to the government exchequer. Even after deduction they file the TDS return in Form 24Q, because of which the same gets reflected in your Tax credit statement i.e. Form 26AS. There is also a late fee for filing the TDS return by the employer. After making the quarterly compliances throughout all the 4 quarters, employer also need to file Part B along with the 4th quarter return mentioning the different incomes of their employees, this Part B statement is as good as the ITR since most of the details are filled there by the employer as declared by their employees.
Isn’t too much compliance? Yes, it is. But that’s how taxation system works. You pay, counterparty makes necessary compliance and you claim the credit of the same.
There are various queries among the taxpayers regarding the TDS and form 16, let’s clear them.
Query 1: My salary is 2,40,000 pa, is my income liable to TDS?
Answer: No, the TDS is liable to be deducted by the employer is the total income exceeds the basic exemption limit.
Query 2: The tax has been deducted from salary but not showing in Form 26AS, can I claim the credit while filing the ITR?
Answer: Yes, you can claim the same. You will get a demand for the TDS which is not showing in 26AS. You just need to do one thing, tell your employer to revise the TDS return of that particular quarter in which your TDS credit is not showing. By doing that, reprocess your ITR and the demand will disappear.
Query 3: If the employer has not mentioned all the deductions in your Form 16, then will I be able to claim the deductions in your ITR?
Answer: Yes, you can. There are no such provisions that prohibits you from claiming the eligible deductions. But it is advisable that employee should declare all the deductions to employer.
Query 4: I have not received Form 16 yet from the employer and the due date for ITR is approaching, what should I do?
Answer: Request the employer for the same, if he is unable to provide, then file the ITR with the salary details which you have through bank accounts and salary slip. Also, the same gets pre- filled in your ITR too, cross check them and file the return.
Query 5: The employer has filed the form 24Q with the wrong details, what should be done?
Answer: You file the return with the correct figures and tell your employer to revise the TDS return.
Query 6: I claimed the credit in my ITR according to Form 16, but the employer revised the TDS return and because of which I received the demand intimation from the income tax department, what should I do?
Answer: It is actually a case of being worried. The reason of revising the return need to be asked from employer. If there is a genuine reason, then you have to pay the impugned demand.
Query 7: This query is from point of view of employer. An employee has income from salary and business. His employer has not deducted TDS but the employee has paid advance tax, whether such advance taxes paid be eligible while computing the average rate of taxation for calculating TDS?
Answer: No, the employer has to deduct TDS on the salary income. However, the employer has an alternative. He may not deduct TDS subject to the compliance of first proviso to section 201(1) of income tax act, 1961 which states that the employer will not be person in default if the employee do these three things:
(i) has furnished his return of income under section 139;
(ii) has taken into account such sum for computing income in such return of income; and
(iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form 26A.
Conclusion: The tax filing process involves multiple compliance steps, including TDS deductions and filing, along with Form 16 and Part B statements. Taxpayers need to ensure that the TDS information is correctly reflected in Form 26AS to claim the credit while filing ITR. Queries related to TDS and Form 16, such as TDS not showing in Form 26AS, incorrect Form 24Q filing by employers, and claiming deductions, have been addressed. It is crucial for employees to be aware of their TDS details and communicate with their employers for accurate reporting. Filing the ITR accurately and on time ensures a smooth tax filing process and compliance with taxation laws.
I have taken the queries which I have received from many salaried class and tried to incorporate them in this article. I would be ever glad if you bring out your doubt too.
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