With the Income Tax return (ITR) filing season approaching, the importance of getting key documents in order for filing taxes cannot be overstressed. While depending upon your unique requirement, the list of tax-related documents you need might vary, in the following sections we will discuss two key documents – Form 16 and Form 26AS that can help a salaried employee file his/her taxes with ease.
What documents do I need to file my taxes?
The key documents required to accurately file your taxes vary depending on the type of income tax assessee you are. For example if you are a salaried employee with no income from interest on fixed deposits or rental income (second house), you will only need your Form 16 and Form 26 AS to file your taxes. On the other hand, if you are self-employed with income from profits/gains obtained from business, you will need your annual profit and loss (P&L) statement, copies of challans for presumptive tax paid as well as Form 26AS to file your income tax return accurately. The following are some of the key documents that can help you file your ITR accurately:
- Form 16
- Form 26AS
- Balance Sheet/P&L Statement
- Monthly payslips/salary certificates
- Interest Certificate for Fixed Deposits/Recurring Deposits
- Copies of Challan 280
- Capital Gains statement for shares/equity mutual funds
- Capital Gains statement for debt investments
- Records of various tax saving investment under various sections
- Home loan certificate, etc.
Note: The above list is indicative and not exhaustive.
What’s included in Form 16?
In case you are a salaried employee filing your income tax return, Form 16 is by far the most important document to consider. Form 16 is provided to salaried employee by the employer and consists of two parts – Part A and Part B. For AY 2019-20, a few changes have been introduced with respect to the Part B of Form 16. The following are the key fields in this key taxation document:
Form 16 Part A
- Name and Address of Employer
- Name and Address of Employee
- PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) of Deductor
- PAN and Reference Number of Employee
- Details of TDS (Tax Deducted at Source) deposited by the employer including deposits made by direct transfer, book adjustment and challan.
Form 16 Part B
The new Form 16 Part B Format as notified by the Central Board of Direct Taxes (CBDT) for AY 2019-20 will contain the following fields:
- Gross Salary with break-up (e.g. Salary, perquisites, profit from salary, total, etc.)
- Exempted allowances with break-up
- Break-up of deductions in lieu of entertainment allowance, etc.
- Gross total income (as computed from previous information)
- Deductions under applicable sections e.g. 80C, 80D, 80E, 80G, 80TTA, etc.
- Aggregate deductible amount under Chapter VI-A
- Total Income
- Tax on total income (as per applicable income tax slab rate)
- Education cess (@3%)
- Tax Payable (before Section 89 relief)
- Details of relief u/s 89
- Total Tax Payable
The new format of Form 16 is thus in line with the details you are required to provide in ITR 1 form which will definitely make it easier for salaried individuals to file their returns with ease.
The Importance of Form 16 in e-Filing ITR
The main role of Form 16 especially in its new form is obviously to provide easy access to details required for correct filing of your ITR. In effect, Form 16 consolidates a range of income tax-related information including but not limited to total income, applicable deductions under various sections/sub-sections of the IT Act, relief u/s 89, total tax liability, TDS details and net tax liability of the assesse.
While, you might be able to complete your Income Tax e-filing using just your Salary Slips instead of Form 16, this process is tedious and the chance of erroneous filing is also high (unless you are a tax expert of course). Also do remember that the benefit of this form is only available to salaried individuals and Form 16 can be received only from their respective employers and cannot be downloaded from an alternate source.
Form 26AS – A Form to check TDS Deposits
One of the key bits of information available from Form 16 Part A is a detailed record of the TDS deposits made by the employer on behalf of the employee. Form 26 AS allows you to correlate the TDS data provided in Form 16 with the government records. You can download Form 26AS for the applicable assessment year from TRACES (TDS Reconciliation Analysis and Correction Enabling System) website using a TRACES Login ID or using the Internet Banking Login credentials of major banks in India (if you have updated PAN with the bank). Alternately you can download the form after logging into your account on the official Income Tax e-Filing website.
How to use Form 26AS
Ideally, the TDS data on your Form 26AS should exactly match the tax paid data shown on Form 16 Part A provided by your employer. Additionally, Form 26AS also contains TAN (Tax Deduction Account Number) details of your employer. But that’s not all that Form 26AS shows as it contains details of any and all TDS that has been deducted from your income/profits and deposited with the government tax authorities. Some of the key types of TDS entries that you can find on Form 26AS are:
- TDS on bank fixed deposit interest earned.
- Details of advance tax, self-assessment tax and/or regular assessment tax deposited.
- Details of income tax refund received by you during the fiscal.
- TDS deducted by renter on rent in excess of Rs. 50,000 per month.
- TCS (tax collected at source) information.
- Records of mutual fund purchases in excess of Rs. 2 lakh (high-value transactions).
- Details of high value property transactions recorded through AIR (Annual Information Return) mechanism.
These details as captured in Form 26AS and can play a key role in helping an income tax assesse file their Income Tax Return swiftly and without errors. Additionally, in case of discrepancy, the tax assessee can get in touch with appropriate tax authorities and seek resolution/redress of the situation.
99% employers, particularly Government, either do not issue form 16 or issue it almost in July back dating it. It creates hardship particularly when some facts are wrongly reflected.