Obtaining Form 16 from your employer is considered a must for filing income tax returns. It is, however, possible to file tax returns without Form 16. Here's how to do this.
Receiving Form 16 and filing income tax return (ITR) are synonymous for salaried persons. For them, the idea of filing their taxes without Form 16 is simply bizarre and far-fetched. Although you may think that obtaining Form 16 is a stepping stone for filing I-T returns, it is very much possible to file returns without Form 16. If you are a first-time tax filer and confused with the concept of filing taxes, you may not even know what a Form 16 is. So, let’s understand this form first before we jump to the concept of filing returns.
Your Form 16 is a record of taxes deducted by the employer from your salary. It is also called ‘salary certificate’ because it also displays the complete salary paid to you by your employer. It is mandatory for the employer to issue this certificate even if no tax has been deducted from your salary.
Form 16 is an important document for salaried individuals because it includes most of the details they need to file their returns. It makes the filing process easy. However, sometimes they do not get a Form 16. There could be several reasons like the employer closed his operations, the employee left the job without completing proper exit formalities, etc. Even in such cases, you can file your return without much hassle. First, you will need to have certain documents with you.
Documents required in the absence of Form 16
Even though you don’t have a Form 16, there are several other documents which can aid you in filing an accurate return. Your monthly pay slips will help you in finding out your taxable income and exempt components of your salary like HRA, children’s education allowance, hostel allowance, conveyance allowance etc. You will need your Form 26AS or Tax Credit Statement, which you can get from the website of TRACES. It can help you in finding out the actual amount of tax deducted by your employer. You need rent receipts and rental agreement to claim HRA. You will require documents to prove the investments you made in tax saving schemes and the expenses which are tax deductible. If you made any other income during the previous year, then Form 16A related to such income will be required. You are also required to provide the details of any advance tax or self-assessment tax paid if any. This will help you in claiming the credit of it in your tax return.
Now you can start the process to calculate your tax liability and file your return. All you have to do is to follow these steps:
1. Calculate gross salary from pay slips
Collect all the payslips you received in the relevant financial year. They contain your salary details. In case you had switched jobs during the year, make sure that you add the salary details of the pay slips received from both the employers. While calculating your salary income, remember that the money you received was paid to you after deducting PF (your and your employer’s contribution), profession tax, TDS etc. You can calculate your gross salary from these details.
2. Calculate the tax deducted from your salary
To do this, you can refer to your Form 26AS. It contains the details of the total tax deducted by the employer from your salary. If the deducted tax matches with the total amount you discovered from your pay slips, then you can proceed. If there is a mismatch, you need to either identify the reason for difference on your own or talk to your employer about it.
3. Claim exempt allowances
HRA is a very common and beneficial allowance for salaried employees. If you are a salaried person living in a rented accommodation, you can claim exemption in tax for HRA. There are certain rules according to which you can calculate your HRA exemption. For this you will need to know your monthly basic salary, monthly HRA and monthly rent figures. If you have not submitted rent receipts to your employer, you can claim the exemption while filing a return. You can also claim exemption for several other allowances like conveyance, children’s education allowance, LTA, etc. which can further reduce your tax liability.
4. Claim all the other deductions under Chapter VI-A
There are many investments under Section 80C that allow tax deductions. Depending on the scheme you chose to invest and the amount you invested, you can get a tax deduction up to Rs 1,50,000.
5. Add income from other sources
Do not forget to add income earned from other sources like rent earned from a property or interest paid on your housing loan, part-time business venture or interest earned on fixed deposits. These should be declared under total taxable income.
6. Compute net taxable income
Now you can find out your net taxable income. Add all types of incomes and subtract the deductions to arrive at your taxable income.
7. Calculate your income tax
You already have your net taxable salary figure. You can now find out your tax liability by referring to the income tax slab rates prescribed for the relevant financial year.
8. Pay additional tax if required
If the calculation shows that your tax liability is more than the amount of tax paid as per your Form 26AS, then you should pay the excess amount yourself to the tax department.
9. E-file your ITR without Form 16
After clearing your tax liability, wait for a few days to let it reflect in your Form 26AS. If your tax liability matches the amount of tax you paid, you can proceed with e-filing your tax return without Form 16.
(By Chetan Chandak, Head of Tax Research, H&R Block India)