Income tax filing 2024: What is Form 16? Here's what you need to know about this key ITR filing document

ITR filing 2024: Access Form-16 to get started with filing tax returns

Now that June 15 is behind us, employees should have received Form 16 from their employers.

This is the key document that will pave the way for the return-filing process. Though the due date for filing income tax returns for financial year 2023-24 (assessment year 2024-25) is July 31, it is best to complete the exercise as quickly as possible.

Besides Form 16, ensure that you gather other important documents such as Form-26AS, as also capital gains, bank account and the annual information statements (AIS) before commencing the tax return filing exercise.

Also read | ITR filing 2024: How to choose the right income tax return form

How to access Form-16

The simplest method is to save the digital copy that your employers may have emailed to you or uploaded on their internal sites. Alternatively, you can download it from the TRACES portal. You can register with your PAN as your user ID and simply choose the Aadhaar-OTP-based authentication to proceed.

The income tax (I-T) department will tally your personal information: name, date of birth and gender as per your PAN and Aadhaar. This validation process will not go through if the details do not match. If they do and the validation is successful, you will receive an OTP on your mobile number and email ID registered with UIDAI. You can then proceed to select the relevant assessment year and download the form.

Also read | Calculate your taxes before you file your ITR

Know your Form-16

The document is essentially made up of two parts: A and B. Part A contains your personal information: your name, address, PAN, the employer's details and the amount of tax deducted from your salary and deposited with the central government.

For the most part, you will have to keep referring to Part B to enter data in your income tax return (ITR). It contains a detailed break-up of your salary, exemptions under section 10, such as leave travel allowance and house rent allowance, and deductions under chapter VI-A.

For example, it will contain deductions under section 80C, such as investments in equity-linked saving schemes (ELSS), life insurance premiums paid, housing loan principal repayment and so on. Likewise, it will show deductions under section 80D on health insurance premiums paid. Any contribution to the National Pension System (NPS) under section 80CCD (1B) will also be reflected in Form-16.

You need to tally your Form-16 details with Form 26AS and Annual Information Statement (AIS). In case of any mismatch, you must reach out to the erring entity—your employers and other tax deductors—to rectify the discrepancy.

If the details in your Form-16 and ITR vary, it could be grounds for a tax notice to be issued by the I-T department. This is why those who missed selecting the old tax regime, with tax deductions, while filing investment declarations with their employers should be cautious.

Why is Form 16 needed?

For one, it forms the base for your ITR. You have to refer to the information in Form 16 while entering details in your ITR form.  This includes your taxable income, exemptions under section 10, deductions under chapter VIA, deduction on housing loan interest paid under section 24(b) and so on.

It also serves as proof of your employer having deposited the TDS on your salary with the I-T department. Banks can also ask for your Form 16, along with ITR, to assess your capacity to repay loans before sanctioning credit.

Beware of false deduction claims, non-disclosure of previous job salary

Effective financial year 2023-24, the new tax regime is the default regime. That is, if you missed expressly choosing the old, with-exemptions regime while submitting your investment declarations, your employer will compute taxes as per the new, minimal exemptions regime and withhold TDS accordingly.

Now, if you decide to ‘switch’ to the old tax regime at the time of filing returns, there is bound to be a mismatch between your Form-16 and ITR data. In such cases, you could get queries from the I-T department. So, ensure that you meticulously preserve proofs of all the deductions claimed, so that you can answer queries from I-T department to its satisfaction.

Also, if you have switched jobs during the financial year, ensure that you obtain a Form 16 from all the employers. The basic exemption limit should factor in salaries received from all the companies you have worked with. Your Form-26AS and AIS will capture details of all your sources of income and financial transactions, so it’s best to be honest with your disclosures.