The last day for filing the income tax returns is near and you may still be scrambling with the appropriate documents to ensure the filing process is smooth.
The last day for filing the income tax returns is here and you may still be scrambling with the appropriate documents to ensure the filing process is smooth. Income tax filing is a mandatory exercise for people with income over Rs 2.5 lakh. However, an individual whose salary is within the Rs 2.5-lakh bracket should also file the returns as a handy document for any financial transaction in future. For individuals, whose salary is above Rs 5 lakh, it is mandatory to do an e-filing.
Amongst the documents you need to file your income tax returns, Form 16 holds importance as it tells about the tax deduction at source (TDS) and has all the details that a salaried individual needs to file returns. But, what if for some reasons you don’t have the Form 16? You can still file your returns.
Let us understand more about the Form 16 and the filing process if it is not there.
What is Form 16
Form 16 is a certificate that your employer issues about TDS deducted on your salary. Form 16, which is issued on a yearly basis, is required because it is a proof that TDS has been deducted on your salary by your employer. The form also comes handy in estimation of your correct tax liability.
Form 16 is divided into two parts—A and B
Form 16 Part A
Along with summary of the TDS deductions from your monthly salary, Form 16 comprises information about PAN (Permanent Account Number) and TAN (Tax deduction & collection Account Number) of both the employer and employee. It also provides other details like the name and address of both the employer and the employee, the assessment year and your employment time in the company.
Form 16 Part B
This part basically provides the total taxable income. It contains details of your yearly earnings, deductions claimed under Section 80 of the Income Tax Act, which includes life insurance premium, EPF, PPF, NSC, or donations made towards charity.
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What if you don’t have Form 16
Although, Form 16 is an important document for a salaried taxpayer, you can still file your returns with certain other documents. You can follow these 5 simple steps to file your income tax returns.
Step 1 – Collect your monthly payslips
The payslips are important as in the absence of Form 16, they will help you in figuring out your actual taxable income. Apart from this, it is important for you to add other incomes in your salary as well to find out if they are taxable. These income includes income from other sources like mutual fund gains, saving bank account interest or Fixed Deposit interest, gains from shares, income from rent, capital gains etc.
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Step 2 – Form 26AS for tax related information
Form 26AS is a consolidated annual statement that shows your sources of income and tax related information. Also known as tax credit statement, it has an information about tax deducted through TDS on your incomes from all sources, which includes your salary too.
Step 3 – Deductions computing and claim
Some of the documents such as House Rent Allowance, Leave Travel Allowance, reimbursements, Section 80C deductions on investments, etc. are non-taxable elements. To lower your taxable income, these exemptions and deductions can be claimed while filing the income tax returns.
Step 4 – Tax liability calculation
Once you have all the above related information, you will be able to figure out your actual tax liability. And after getting the taxable figure, compare it with the TDS you have already deposited. In case the TDS deposited is higher than the actual tax liability, then you get an opportunity to claim for refund. In case, TDS is lower, then you would have to pay additional taxes.
Step 5 – ITR forms
One of the crucial and complicated steps of tax filing is identifying the relevant form for yourself. The relevant tax forms for a salaried employee is ITR 1. Depending on your source of income, you can go for ITR 2, ITR 2A, Form 3, Form 4 and Form 4A.
Once you have completed the filing process without Form 16, submit the ITR by July 31st.
(The author is CEO, Bankbazaar.com)