Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
Open DEMAT Account with in 24 Hrs and start investing now!
Top Headlines »
Open DEMAT Account in 24 hrs
 How To File ITR Online - Step by Step Guide to Efile Income Tax Return, FY 2023-24 (AY 2024-25)
 Old or new tax regime for TDS on salary? This post-election 2024 event will impact your tax planning
 What Are 5 Heads Of Income Tax?
 Income Tax Dept releases interim action plan for FY25 on tax collection, refund approvals
  Income Tax Return: 5 lesser-known tax-saving tips from Section 80
 Income Tax Return: 5 lesser-known tax-saving tips from Section 80
 Why you need not rush to file your ITR immediately
 Income tax returns: ITR-1, ITR-2, ITR-4 forms for FY 2023-24 available for e-filing
 Section 80DDB tax benefits for specified illnesses: 5 things to know
 Income tax slabs FY 2024-25: Five tips to help taxpayers decide between old and new income tax regimes
 ITR-1, ITR-2, ITR-4 forms for FY 2023-24 (AY 2024-25) available now on e-filing income tax portal

Here's how the new Form 16 will change income tax return filing this year
May, 17th 2019

Form 16 is issued annually, by an employer to an employee as a proof of salary paid and taxes deducted on it. It has two parts i.e., Part A and Part B as discussed below.

Tax returns of the salaried taxpayers for FY 2018-19 (AY 2019-20) can be filed in form ITR-1 or ITR-2. The details of income from salary, allowances exempt, deductions claimed, are in Part B of Form 16, while Part A contains the employer, employee and employment details such as PAN, address etc.

The Central Board of Direct Taxes (CBDT) has notified certain changes in Form 16. The new Form 16 is made effective from 12 May, 2019. Employers issuing Form 16 for the financial year 2018-19 will have to issue them in the new format.

1) Details under the new Form 16:

Under the new format of Form 16, Part B has been amended to provide more details about the allowances exempt under section 10 such as house rent allowance, leave travel allowance etc., and deductions allowed under Chapter VI-A of the Act i.e. section 80C to 80U.

Form 16 will contain information about the below allowances:

Exempt Allowances required to be disclosedExempt under section
Leave travel concession 10(5)
Death cum retirement gratuity 10(10)
Commuted value of pension 10(10A)
Leave encashment 10(10AA)
House rent allowance 10(13A)
Any other amount exempt under section 10


Additionally, Form 16 will contain information about the below deductions:

Deductions required to be disclosedSection
Life insurance premium paid, contribution to PPF etc. 80C
Contribution to pension funds 80CCC
Employee’s contribution to pension scheme 80CCD(1)
Taxpayer’s self contribution to notified pension scheme 80CCD(1B)
Employer’s contribution to pension scheme 80CCD(2)
Health insurance premium paid 80D
Interest paid on loan taken for higher education 80E
Donations 80G
Interest income on savings account 80TTA
Amount deductible under any other provision of Chapter VI-A

2) Impact on ITR filing

2a) ITR-1

ITR-1 form can be filed by a resident individual taxpayer having total income up to Rs 50 lakh. Such individuals can report income from salary, one house property, income from other sources and agricultural income up to Rs 5,000 in the ITR-1 form.

The ITR-1 form requires broad details of the components of income from salary i.e., salary, perquisites and profits in lieu of salary. However, the form requires complete details of allowances exempt under section 10. Therefore breakup of exemption under each allowance such as HRA, LTA, gratuity etc must be separately reported. Each of the deductions under chapter VI-A must also be separately reported. After the notification of the new Form 16, these details would be available from the new Form 16 issued to an employee and thus facilitate the filing of the ITR. If you use an online platform to file your ITR, these details can be automatically populated to your ITR, minimising your effort and helping you e-file accurately.

2b) ITR-2

The form ITR-2 applies to taxpayers who are individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. Also, taxpayers who have total income exceeding Rs 50 lakh and are not eligible to file ITR-1 can file ITR-2.

In addition to the details of allowances and deductions required under ITR-1, the ITR-2 form requires complete break-up of the details of various components of salary. It requires specifications of the amounts falling under salary, perquisites and profits in lieu of salary. However, the new format of Form 16 does not provide the break-up of the salary components. This information can be drawn from the annexure to Form 16 provided by an employer. An illustration of the annexure is provided below:


Salary componentsAmountAmount
1. Salary as per provisions of section 17(1)
a. Basic salary XXX
b. House rent allowance XXX
c. Leave travel allowance XXX
d. Uniform allowance XXX
e. Special allowance XXX
f. Other allowance XXX
Total salary as per section 17(1) XXX
2. Value of perquisites under section 17(2) as per form 12BA XXX
3. Profits in lieu of salary under section 17(3) as per form 12BA XXX


2c) Other information available under the new format Form 16 which taxpayers would also report in the ITR forms:

2C1) Income (or admissible loss) from house property as reported by an employee to the employer

The taxpayer can report the income (loss) from house property under the section ‘Details of Income from House Property’ of ITR-1 or ITR-2.

2C2) Income under the head ‘Other Sources’ reported by an employee to the employer

The taxpayer can report the income under the head other sources under the section ‘Income from other sources’ of of ITR-1 or ITR-2.

2C3) Total amount of salary received from other employers

An employee will have to provide employer wise salary details. The complete break-up of details of the various components of salary have to be provided for salary earned from each employer during the financial year. For this purpose, an employee would need to refer to the annexure to Form 16 received from the respective employer and fill in the details in the ITR-2. Some websites allow uploading of more than one Form 16, making this task super easy.

ITR-1 does not require the reporting of employer wise details of salary as required in ITR-2 above.

Thus, the above changes in Form 16 along with the annexure to Form 16 would provide all the details necessary for filling up the salary data in ITR-1 and ITR-2. Further, under ITR-2, the details would facilitate cross verification of the claims for exemptions under section 10 made by the employees as against the allowances received as components of the salary.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting