The Central Board of Direct Taxes has notified the changes in Form 16 (TDS Deduction Certificate) issued by Employer. The new changes would be effective from May 12, i.e. before the last date for issue of Form 16. Read- CBDT notifies detailed format of Salary Certificate | Form No. 16 | Form No. 24Q
The new certificate requires a detailed break up of all the tax exempt allowances paid to the employees under section 10 of the Income Tax Act including leave encashment, medical allowance, house rent allowance, pension and gratuity etc. The employer will have to specify the nature as well as amount of allowances which are exempt from tax. Similar details have been asked for this year in ITR-1 also.
The new format will aid the tax department to scrutinize the detailed breakup of the claimed and also plug the possibility of tax evasion. The previous format does not require the specific list of exempt allowances. Earlier consolidated disclosure was required for various deductions. Apart from changes in form 16 & ITR-1 changes has been made in TDS Returns (Form 24Q) filed by the employer for tax deducted.
Earlier details were different across form 24Q, Form 16 & ITR, so it was difficult to track the tax evaders. This move will help the department to cross verify the information from ITR filed by the taxpayer. Further in Form 24Q it is mandatory to furnish the PAN of the lender in case any deduction has been claimed in respect of housing loan taken from a person other than a Financial Institution or the Employer.
The above changes will bring more accountability in processing of returns with the help of IT Infrastructure .The Income Tax Department have notified new ITR forms for salaried class for FY 2018-19, the due date for the same is 31st July 2019.
The above article is compiled by Bhanu Nagpal Chartered Accountant. For Further queries please feel free to contact us on firstname.lastname@example.org.