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Form 16 format revised after changes in ITR forms: 5 points
May, 06th 2019

You will soon get Form 16 from your employer. This year, the Income Tax department has revised the format of Form 16 by adding various details to make them more elaborative. The changes in Form 16 format have been made to bring then in parity with latest changes made in ITR (income tax return) forms. The revised format for Form 16 has already been notified by the Income Tax department and will come into effect from May 12, 2019. This means the income tax returns for financial year 2018-19 will have to be filed on the basis of revised Form 16.

“For employees, it would be easier for them to fill the necessary information from Form 16 into their ITR," says Sandeep Sehgal, director of tax and regulatory at Ashok Maheshwary & Associates LLP.

Form 16 is a certificate issued by your employer according to the format prescribed by the Income Tax authorities and is issued on or before June 15 of the next year following the end of the financial year in which tax was deducted. This form lists out various things like the total salary paid to you during the period, the total tax that the employer deducted at source (TDS) and the deductions that you have claimed during the year.

Form 16 has two parts. Part A and Part B. Part A contains the employee and employer details, period of employment with the employer and summary of the periodic TDS on your income. Part B has details of income earned as well as details of deductions under sections such as 80C, 80CCC and 80CCD, 80D, 80E (interest on education loan), 80G (donations), and others.

Here are 5 things to know about the changes made in the Form 16 format:

1) Reporting of allowances exempt under Section 10 – Earlier, all the exempted allowances used to be clubbed under one heading and companies used to disclose those with the name of the allowance. “The new format of Form 16 asks for putting the allowances under specific provisions like gratuity, HRA, LTA, etc. They are to be disclosed under specific heading for them and the balance are to be included in one residual head," says Sandeep Sehgal of Ashok Maheshwary & Associates LLP.

2) Standard Deduction – The standard deduction of ?40,000 for salaried individuals was introduced last year for FY2018-19. Now, a separate row for its disclosure has been included in the revised Form 16. The changes have also been made in ITR forms.

3) Income from previous employer is to be disclosed in a separate row. Earlier, there was no separate disclosure for this and companies used to club this in a separate head meant for all other incomes which the employee wishes to report, Sehgal added.

4) Reporting of deductions: Deductions like tuition fee, insurance premium, donations, NPS etc. have been categorized separately under respective heads.

Revised Form 16 as notified by Income Tax Department:

5) "Earlier, where the disclosure of various deductions were mentioned in a consolidated manner, ranging from 80C, 80CCD, 80E, 80G would now be required to be disclosed separately. These specific disclosures would provide ease to the tax authorities in understanding the various components of income of the taxpayer and thereby, facilitating the conduct of scrutiny more precisely," said Nangia Advisors (Andersen Global) Director Sanjoli Maheshwari.

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