The Income Tax Department has now announced the launch of a Digital Form 16 to make it easier for taxpayers to file their returns. The development came days after the agency released ITR Forms 1 to 7 after a series of updates. The last date for individuals and those who do not have to get their accounts audited is July 31. Meanwhile businesses and professionals requiring an audit as well as domestic companies will have time till October 31 to file their returns for the recently concluded financial year.

What is Form 16?

According to the Income Tax Department, Form 16 or Form 16A is the certificate of deduction of tax at source. It is issued on deduction of tax by the employer on behalf of the employees and provide details of TDS/TCS for various transactions between deductor and deductee. It is mandatory for employers to issue these certificates to taxpayers.

The document is typically issued by the end of May (of the assessment year) and several key details from this form must be shared while filing income tax returns. While it is not necessary to upload the form itself, failure to file returns using the given information can incur penalties or interest on unpaid taxes.

How does the Digital Form 16 work?

The electronic version of Form 16 is generated directly from the TRACES portal by employers — guaranteeing consistent and accurate data about your salary, deductions and TDS. The form itself has also been updated to include clear information about tax-exempt allowances, deductions and more in order to reduce confusion while filing tax returns.

Taxpayers can simply upload this digital document onto most tax-filing websites, and allow the system to automatically fill in key details. This can save time and effort as it eliminates the need for manual calculations and possible inaccuracies . The system also alerts taxpayers to any discrepancies so that they can be rectified before submission.

Who can file which ITR form?

ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers. Sahaj can be filed by a resident individual having annual income of up to Rs 50 lakh and who receives income from salary, one house property, other sources (interest) and agricultural income up to Rs 5,000 a year. Sugam can be filed by individuals, Hindu Undivided Families (HUFs) and firms (other than Limited Liability Partnerships (LLPs)) having a total annual income of up to Rs 50 lakh and income from business and profession.

ITR-2 is filed by individuals and HUFs not having income from profits and gains in business or profession, but having income from capital gains.

ITR-5 is filed by firms and Limited Liability Partnership and Cooperative Societies.

ITR-6 is filed by companies registered under the Companies Act.

ITR-7 is filed by trusts and charitable institutions.

(With inputs from agencies)