What is your Form 16? Check how it can simplify Income Tax return filing in AY 2025-26

From April 1, 2025, the new income tax return filing season will start for AY2025 -26. For salaried taxpayers, their employer will provide a Form 16 containing all income tax details for the fiscal year 2024-25 (or assessment year 2025-26).

Form 16 is a crucial document for salaried employees in India, particularly as the income tax return (ITR) filing season for the assessment year 2025-26 approaches.

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Issued by employers, Form 16 contains comprehensive details about an employee's salary and the tax deducted at source (TDS) throughout the financial year. This document serves as evidence that an employer has duly deducted and deposited the TDS on behalf of their employees with the Income Tax Department. It not only simplifies the ITR filing process but also reduces the likelihood of errors in reporting income and tax deductions. 

Employers are expected to distribute this form by June 15, 2025, for the assessment year 2025-26. However, some delays may occur due to administrative challenges. 

Parts of Form 16

Form 16 is divided into two main parts: Part A and Part B. Part A includes critical information about the employer and the employee, such as the Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), and the employment period. It also provides a summary of the tax deducted and deposited. 

Part B, on the other hand, offers a detailed breakdown of the employee's salary structure. This includes taxable income, exemptions under sections like House Rent Allowance (HRA) and Leave Travel Allowance (LTA), and deductions under various sections such as 80C and 80D. While Form 16 is not mandatory for filing an ITR, possessing it assures accuracy and makes the process more straightforward.

Importance of Form 16

The necessity of Form 16 extends beyond mere ITR filing. It is instrumental in loan applications, as financial institutions often require it as proof of income. Furthermore, Form 16 is essential for claiming tax refunds. If an employee's TDS exceeds their tax liability, this document becomes crucial in facilitating the refund claim process. 

In case an employee does not receive Form 16, other financial records can be used to file an ITR. Alternative documents include salary slips, the Form 26AS, and the Annual Information Statement (AIS), which collectively provide a comprehensive view of the individual's financial activities. 

What if you don't receive your Form 16

Despite its benefits, individuals can still proceed with their income tax filings without Form 16, utilising other documents such as bank statements. These records are valuable for verifying income and deductions. It is important to ensure that tax credits in Form 26AS and AIS are cross-verified before submitting an ITR to prevent discrepancies. 

As per experts, Form 16 is a vital document for salaried employees, simplifying the tax filing process by providing a detailed breakup of salary and TDS. While it is not mandatory, having it ensures accuracy and ease in ITR filing. If you do not receive Form 16, you can still file your ITR using other financial records. Always verify tax credits in Form 26AS and AIS before submission to avoid discrepancies. 

Changes in Form 16 for AY 2025-26

In its recent circular dated February 20, 2025, the Central Board of Direct Taxes (CBDT) has issued revised guidelines for tax deductions from salary in accordance with section 192 of the Income Tax Act, 1961. These guidelines have taken into account the amendments introduced in the Finance Acts of 2024 and 2023. The updated CBDT circular will be applicable to tax returns for the financial year 2024-25 (assessment year 2025-26).

CBDT has introduced changes to Form 16 to enhance clarity on tax deductions and benefits, providing detailed information on various taxes, deductions, and exemptions pertinent to salary. The revised Form 16 aims to simplify the tax filing process for individuals facing challenges.

Form 16 acts as a TDS certificate, delineating the salary earned and the corresponding TDS deductions.