The major change in Form 16 with respect to the new regime is in Part B of Form 16 where section A (the first line of Form 16) asks ‘Whether opting for taxation u/s 115 BAC?’ to which there are options of selecting ‘Yes’ or ‘No’.
What is Form 16?
It is a certificate of TDS on a salary that contains details of income earned and the taxes deducted. It is divided into two parts: Part-A and Part-B. The employer can download Form 16 Part A and Part B from their account on TRACES.
Tax details: Tax deducted and deposited on the employee’s behalf
Sample Form 16 – Part A
Form 16 – Part B
Part-B is an annexure containing details of Income Chargeable under the head of ‘Salary’. Salary breakdown includes allowances, perquisites, bonus, income tax deductions, Taxable Income, Taxes, and TDS. From FY 2018-19 Part-B should be issued in a standardized format.
Gross salary is the employee’s total remuneration. It includes basic salary, allowances, overtime, bonus and any other amounts before any deduction made.
Basic Salary
It is the predefined fixed pay that an employee receives each month. It also includes compensation like gratuity, pension, advance salary, commission, etc.
Perquisites
These are additional benefits provided by the employer like rent-free accommodation, concession in rent, etc. It also includes expenses incurred by the employer on behalf of the employee like medical, education, etc.
Profits
The amount received from a current employer or former employer in connection with their termination like a bonus, etc.
Salary from the other employer(s)
The current employer will include your salary from the previous employer in the Gross Salary. It the case usually when, the employee switched jobs or have multiple employers during the financial year.
Additional compensation received by employees over and above their salary is Allowances. Employers give allowances to their employees to help them meet certain particular requirements. Some of the common allowances include:
For employees to cover their accommodation expenses. Salaried individuals who live in rental premises can claim tax benefits for the amount of rent they pay every year
Death-cum-retirement gratuity
For employees covered under the Gratuity Act, 1972. There is a predefined formula to calculate the amount that is tax-exempt
Commuted Value of Pension
For government employees and other employees who receive a commuted pension from the employer.
The cash equivalent of leave salary encashment is a retirement benefit for employees. There is a predefined formula to calculate the amount that is tax-exempt.
Deductions u/s 16
Tax deductions are deductible from taxable income (adjusted gross income). An employee is eligible to claim these deductions based on the investments made and expenses incurred during the year. These deductions help reduce the overall tax liability. Some of the most commonly used deductions u/s 16 are:
Standard Deduction
It is a flat deduction from the salary. No proof is required to claim the standard deduction. The standard deduction allowed for FY 2018-19 is INR 40,000 and FY 2019-20 is INR 50,000.
Entertainment Allowance
It is exempt only for government employees. Entertainment Allowance up to Rs. 5,000 is allowed.
Employment Tax
Also known as professional tax. An employer pays it on behalf of the employee to the state government. It ranges from INR 2,400 to INR 2,500.
Total Income from Salary
Total Taxable Salary is after deducting the allowances u/s 10 and claiming deductions u/s 16.
The dividend, interest income from the savings account, fixed deposit, etc.
Income from House Property
Rental income from house property including flats, office spaces, farmhouses, etc. It also includes interest and principal repayment of loan taken on self-occupied house property.
Chapter VI-A Deductions
80 C: ELSS, Provident Fund, Life Insurance Premium, etc.
It includes the total income earned from salary, house property and other sources, after claiming all the exempt allowances and deductions during the financial year.
Net Tax Payable
Net Income: Tax deducted on income at the slab rate. Tax includes Income Tax, Surcharge, Health & Education Cess, Interest Penalties, etc.
Tax Payable: Tax calculated at Slab Rate on Net Income. Surcharge and Health & Education Cess is levied on it. Rebate u/s 87A and Relief u/s 89 are given based on total income earned by an employee.
FAQs
Which ITR should I file if I have multiple Form 16?
You can file ITR-1. Any individual who earns only salary income can file ITR-1.
What if my employer has not provided me with a Form-16?
If your employer has not provided you with a Form 16, no need to worry. You can always download Form 26AS from the income tax e-Filing website to check TDS credit. And you can use salary slips to determine taxable salary income.
How to download Form-16 online?
A salaried individual cannot download his/her Form 16. It can only be downloaded by the deductor (employer) from his TRACES account.
Can I claim the deductions which are not shown in Form 16?
Yes, you can claim deductions that are not shown in the form while filing your ITR. But make sure to keep supporting documents with you for future reference.
Can I file ITR with multiple Form 16 with Quicko?
If someone has switched jobs during the year, he’ll have multiple Form-16. You need not worry. Just upload one, save it and add another. Quicko will add up all your salaries and deductions from multiple Form-16s.
Can an employer issue Form 16, if no TDS is deducted on salary?
Yes, an employer can still issue Form 16 to you. An employer will not issue Form 16 Part-A since no tax is deducted at source. However, your employer can issue Form 16 Part-B which is a salary statement.
This quarterly breakdown of Dividend Income under IFOS will help to calculate and determine penalty u/s 234C for the delay in payment of Advance Tax.
Hope this helps!
I had received dividend recently but I had noticed that TDS had been deducted. any idea as to why has it happened and is there a way I can claim this TDS?
After the introduction of Budget 2020, dividend income is now taxable in the hands of the shareholder; and is also subject to TDS at 10% in excess of INR 5000 u/s 194 & 194K. Foreign Dividend is taxable at slab rates. TDS is not applicable to such dividends. The taxpayer should report such income under the head IFOS in the ITR filed on the Income Tax Website.
You need to pay Income tax on the net taxable income, i.e. after subtracting deductions, expenses, etc.
If the net taxable income is negative i.e. if there is loss, you can carry it forward when filing the ITR
Hey @TeamQuicko
Thanks for the blog! Just one quick question - Why do we have to report a quarterly breakdown of Dividend Income under IFOS?
Thank you!
Hey @TanyaChopra
This quarterly breakdown of Dividend Income under IFOS will help to calculate and determine penalty u/s 234C for the delay in payment of Advance Tax.
Hope this helps!
I had received dividend recently but I had noticed that TDS had been deducted. any idea as to why has it happened and is there a way I can claim this TDS?
Hey @HarshitShah
After the introduction of Budget 2020, dividend income is now taxable in the hands of the shareholder; and is also subject to TDS at 10% in excess of INR 5000 u/s 194 & 194K. Foreign Dividend is taxable at slab rates. TDS is not applicable to such dividends. The taxpayer should report such income under the head IFOS in the ITR filed on the Income Tax Website.
Hope this helps!
Hey @HarishMehta
Yes, dividend income is now taxable from FY 2021-22 onwards and it has to be reported under the head of IFOS.
You can read more about it here:
Hi @Maulik_Padh,
You need to pay Income tax on the net taxable income, i.e. after subtracting deductions, expenses, etc.
If the net taxable income is negative i.e. if there is loss, you can carry it forward when filing the ITR
Here are some of the articles which might help