Form 16 Has Changed: Not Knowing These New Rules Before Filing Your Income Tax Can Cost You Big!

Form 16 Has Changed: The time to file income tax returns is here. Many offices have already started issuing Form 16. The process of filing income tax returns begins as soon as this Form 16 is received. For every salaried taxpayer, Form 16 is an extremely important document. Through this, the employer deducts tax at source (TDS) from the employee’s salary and deposits it into the government’s treasury. Form 16 contains all the information regarding your salary, various exemptions, and tax structure. This financial year, some significant changes have been made to Form 16, which every taxpayer needs to be aware of. Let’s delve into these changes in detail.

What’s New in Form 16?

To benefit taxpayers, the Income Tax Department has made Form 16 more informative and detailed. Several new pieces of information have been added to this new form that were not there before. It is believed that this will make filing income tax returns even easier.

1. Detailed Description of Other Income

Previously, employees could declare their income from sources other than their salary to their employer, but there was no provision for the employer to deduct TDS on that additional income. Under the new rules, if you have income from any other source, such as house rent, interest from a bank or post office, or anything else, that information will now be mentioned in detail in Form 16. This will make it easier to calculate the correct tax on your total income and will reduce the tendency for tax evasion.

2. Clear Distinction Between New and Old Tax Regimes

Currently, there are two tax regimes for filing income tax – new and old. Many taxpayers are confused about which of the two regimes is more beneficial for them. To eliminate this confusion, the new Form 16 will clearly specify the differences between the two tax structures. It will clearly state which exemptions are available under which regime and what benefits are not available. This will allow taxpayers to easily choose the right tax regime for themselves.

3. Details of Contribution to the National Pension Scheme (NPS)

Many salaried employees invest in the National Pension Scheme (NPS). The new Form 16 will contain detailed information about your and your employer’s contributions to your NPS account. This will allow you to easily claim tax deductions under sections 80C and 80D of the Income Tax Act.

4. New Rules for Tax Exemption on Home Loans

If you have taken a home loan, you can get a tax exemption on it. Under the new rules, you will only get a deduction of up to ₹2 lakh on the interest of your home loan if you opt for the old tax regime. This benefit is not available in the new tax regime. Therefore, if you have a home loan, choose your tax regime carefully.

The Two Parts of Form 16

Form 16 is mainly divided into two parts – Part A and Part B.

• Part A: This part contains your and your employer’s PAN number, details of TDS deposited, etc.
• Part B: This part contains a detailed breakdown of your salary, various allowances, and details of deductions available under sections 80C and 80D.

Final Words

After receiving Form 16, scrutinize all the information carefully. If you notice any discrepancy, contact your employer immediately. An accurate Form 16 will make your income tax return filing process much smoother and save you from unnecessary legal hassles.