News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Direct Tax »
 No new changes in online ITR forms, says CBDT
 Will income tax filing deadline be extended from July 31?
 Traded in futures and options? You must use ITR-3 to file tax return
 4 reasons why deadline to file ITR needs to be extended this year
 ITR filing: Prefilled ITRs now available for all individuals
 How to arrange for tax money if you don’t have adequate funds Income Tax Return 2019
 Nature of income can determine rate of TDS charged
 Section 194A – TDS on interest other than interest on securities
 File Income Tax return before last date and avoid these consequences ITR filing
 Claiming tax refund in your ITR? Don't forget to pre-validate your bank account
 Section 193 – TDS on Interest on Securities

Form 16: New format for salary TDS certificate makes it difficult to fudge income, tax breaks
April, 17th 2019

The CBDT has notified a new format for Form 16 – the salary TDS certificate – requiring a detailed break up of tax exempt allowances paid to employee and also of all tax breaks claimed by him/her. The earlier format allowed companies to give consolidated figures or break-up in different formats for both these thereby leaving some ambiguity regarding their individual composition.

Concurrent changes have been made in the format of the TDS return (details of TDS from employees’ salaries) filed by companies with the tax department to allow the tax man to cross check an employee’s ITR, Form 16 and the company’s TDS return easily.

Last year the tax man had detected several cases of false claims of large income tax refunds made by some employees which is likely to be another reason for this streamlining exercise which is aimed at removing all space for such manoeuvres in future.

The new format will allow the tax department to view a detailed break up of the income and tax breaks claimed by a salaried person at the first instance itself. Consequently, any discrepancy between the income and deductions shown in Form 16 and the ITR filed by the person can be immediately spotted. This new format is likely to help the department digitise cross checking of figures too because it takes away the leeway that companies earlier had in providing the break up of income and deductions and fixes the format for providing these.

The new format for Form 16 was notified by the Central Board of Direct Taxes (CBDT) via a notification dated April 12, 2019. The format specified in the notification comes into effect from May 12, 2019 which is well before the last date for issue of Form 16 or the TDS certificate for salary by employers. Therefore, those issuing Form 16 after this date will have to do so in the new format.

As per the changes notified, Form-16 issued by an employer will have to specify the nature of tax-exempt allowances paid to the employee. Abhishek Soni, CEO, Tax2filing.in, a tax-filing website says, "The previous format of Form-16 was not providing the specific list of tax-exempt allowances on which the salaried person was not required to pay any tax. Now as per the revised format, the employer will have to specify the nature as well as amount of allowances which are exempt from tax. Similar details have also been asked for in this year's ITR-1." The revised format provides a list of allowances such as Travel concession or assistance under section 10(5), house rent allowance under section 10(13A) and so on that are exempt under the Income Tax Act.

Chartered Accountant, Naveen Wadhwa, DGM, Taxmann.com says, "In existing Form 16 (Part B), the employer had an option to provide a description of the exempt allowance. Consequently, every organization had created different formats as per their requirements, which resulted in different formats of Part B of Form 16. The new Form 16 (Part B) has removed this option to write-down the description of exempt allowances. Now the employers have to mention the amount of exempt allowance before earmarked fields."

The move is expected to make it easier for the department to cross check information from ITR-filed by the taxpayer, TDS returns (Form 24Q) filed by the employer for the tax deducted and Part-B of Form-16. Apart from making changes in the Form-16, the notification has made concurrent changes in the format of TDS returns filed by the employer for the tax deducted from salary paid to employees.

Chetan Chandak, Head of Tax Research, H&R Block India says, "The Part B of form 16 has been amended to provide the section wise break of various exemptions allowed under section 10 of the Income Tax Act. This is in line with the recent changes made in the tax return forms (ITRs) last year (i.e. A.Y. 2018-19). The new forms also ask for more elaborate section wise break-up of various Chapter- VI-A deductions. Though many corporates/employers were already providing this break in the Form 16s issued by them but it was difficult for the tax department to verify as to whether the employees/taxpayers are reporting these exemption/deductions in their tax return in-line with the form 16 issued by the employer. As these details were not uniform across Form16, TDS return - Form 24Q and Individual Tax Return forms - ITR, it was bit difficult for the tax department to track the tax evaders who were resorting to false claim (exemptions/deductions) to reduce the tax liability."

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Custom Software Development Outsourcing Custom Software Development Offshore Cus

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions