Waiting for Form 16? Here's when will you get it and what to check
Form 16 is an important document for salaried people. It's a certificate issued by the employer, showing how much salary was paid and how much tax was deducted during the year. Many employees wait for this before filing their Income Tax Return (ITR). Wondering when it'll arrive? Here's what you need to know.As per income tax rules, employers must file their e-TDS return for the last quarter (January–March) of the financial year by May 31. Once this is done, they have 15 days to issue Form 16. So, the last date to issue Form 16 is latest by June 15.advertisementAccording to CA (Dr) Suresh Surana, "Salaried employees can expect to receive Form 16 for the Financial Year 2024–25 on or before June 15, 2025, in accordance with Rule 31(1)(a) of the Income-tax Rules, 1962. Employers are mandated to issue Form 16 after filing the TDS return in Form 24Q for the fourth quarter, which is due by May 31, 2025."WHO WILL GET FORM 16?
Employers are required to issue Form 16 to employees if they've deducted TDS from their salary. All salaried individuals with tax deductions are eligible to receive it.However, as per FY 2024–25 rules, no tax is payable under the new regime for income up to Rs 7 lakh, and under the old regime for income up to Rs5 lakh. So, if your salary is below these limits and no TDS was deducted, the employer may not issue Form 16.WHAT'S INSIDE FORM 16?advertisementWhen it comes to filing your ITR, Form 16 plays a key role. CA Surana said, "Form 16 is a certificate of tax deducted at source (TDS) on salary and serves as a key document for filing income tax returns. It provides a detailed summary of salary paid and TDS deducted, enabling employees to accurately file their Income Tax Return (ITR) for Assessment Year 2025–26, the extended due date for which is 15 September 2025 (Circular No. 6 of 2025 dated 27 May 2025)."Form 16 consists of two parts. Part A shows quarterly details of salary paid and TDS deducted by the employer. It also includes the PAN and TAN of the employer, your PAN, and other related information.Part B gives a breakdown of your salary, exemptions, and deductions based on the investment declaration you shared and proofs you submitted. It also shows the final taxable income after considering all eligible deductions and exemptions.IS FORM 16 PASSWORD PROTECTED?Form 16 is usually sent as a password-protected file. The password is often a combination of your PAN in either lowercase or uppercase and your date of birth in the format DDMMYYYY or DD/MM/YYYY. Your employer will usually let you know the exact format to use when they send you the document.All in all, Form 16 is an essential piece in your tax puzzle. If your employer deducted TDS, you should get it by 15 June. Make sure all the information in it matches your records.Must Watch
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'Besides, the new tax regime has become the default tax regime, and if you wish to opt for the old tax regime, you will have to explicitly choose it by filing Form 10-IEA before filing your ITR,' says mistake many people make before filing their tax returns is not checking the Annual Information Statement (AIS) and Form 26AS, which provide a summary of all their transactions and taxes.'Form 26AS is a tax credit statement that primarily serves as a summary of taxes credited against a taxpayer's PAN,' says Raj Lakhotia, Managing Partner, LABH & Associates. 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'If there are any mismatches (TDS not reflected, incorrect income figures), contact the deductor (employer, bank) to get it rectified,' says Jethani.'Reconciliation of both with the ITR helps avoid discrepancies, prevents underreporting or duplicate claims, facilitates faster processing of returns and refunds, and avoids tax notices,' says you fail to list all your incomes by mistake or intentionally, it can prove very expensive. 'Since most filings are based on AIS and TIS, people only refer to these, but there is the risk of missing out incomes on which TDS is not deducted, such as interest on sovereign gold bonds or rent for residential property if it is less than Rs.50,000 a month,' says Agrawal.'It's also easy to miss out on interest from savings accounts, fixed and recurring deposits, crypto, or freelance, rental and foreign incomes,' says Sudhir Kaushik, Founder & CEO, frequently overlook categories of income that are accrued but not received, or not actively tracked, such as capital gains from sale or redemption of shares, mutual funds, real estate, or other capital assets, and dividend income, especially when credited without TDS or reinvested,' says income that is typically not included is the one derived from assets transferred to the spouse without consideration, or income from minor children. 'Also, in case of sale of jointly owned property with spouse but funded only by one, people report capital gains proportionately in both the returns, rather than in the return of the spouse who funded it,' says Kumar. After Budget 2024 Capital gain rates & holding periods have changedDepending on whether it is underreporting or misreporting of income, it can result in a penalty of 50-200% of the due tax, besides interest liability and even risk of prosecution in extreme exempt income is not a part of your total taxable income, it is mandatory to report it under the appropriate section (Schedule EI). 'Non-reporting of such income may lead to a defective return, and if the defect is not rectified within the prescribed timeline,the return may be treated as invalid,' says Lakhotia. Agrees Kumar: 'With automated processes in place, it is likely to get noticed. This may result in waste of time and energy responding to notices and giving explanations why it was missed.'Exempt income that needs to be reported includes agricultural income; share of profit from a partnership firm; interest income from Public Provident Fund (PPF); interest income from tax-free bonds; gratuity and leave encashment (up to specified limits under Section 10(10AA)); maturity proceeds of life insurance policies (subject to conditions under Section 10(10D)); exempt portion of house rent allowance (HRA) under Section 10(13A); exempt portion of leave travel allowance/concession (LTA/LTC) under Section 10(5); commuted pension (up to specified limits under Section 10(10A)); Sukanya Samriddhi proceeds and interest earned; interest and maturity proceeds from Employees' Provident Fund (EPF), subject to specified conditions; and income of a minor child clubbed with the parent (exempt up to specified limit under Section 10(32)).When people change jobs within a financial year, they are likely to make the following accounting mistakes. Claiming basic exemption & deduction twice: 'Both new and previous employers may independently apply basic exemption limit, standard deduction, and deductions under Chapter VI-A, especially if investment declarations have been submitted twice, resulting in double claiming of tax benefits and lower TDS deducted,' says Lakhotia. 'Where such tax liability, net of TDS/TCS, is more than Rs.10,000, the employee will end up paying interest under Sections 234B and 234C if he doesn't pay advance tax,' cautions Kumar. 'Also, irrespective of the number of employers during the year, the standard deduction is capped at Rs.75,000 in the new regime,' says Agrawal. Not consolidating Form 16s, incomes: Obtain Form 16 from all employers and consolidate income and tax details as it can lead to incomplete income reporting and inaccuracies in TDS credits. 'Ensure all income, including any arrears, bonuses, or final settlement from the previous employer, is included,' says Jethani. Not reconciling Form 16 & Form 26AS : Failure to check the TDS details in Form 16 and those reflected in Form 26AS may lead to missing mismatches, which can result in delays or tax notices. Ignoring taxability of gratuity, leave encashment: 'The other common mistake is claiming exemption for gratuity or leave encashment exceeding the maximum amount specified in the Act if the employee does not keep track of claims in the previous employments,' says Kumar. Failure to account for these can cause errors in tax liability computation. Last year, the Income Tax Department uncovered rent receipts worth Rs.1 crore by a single employee and bore down on the company employees who had used the same PAN multiple times to claim HRA exemption. Don't make the mistake of conducting fraud as it can result in hefty penalties, including a fine of up to 200% of the misreported exemption is available under the old tax regime to salaried employees as part of their salary structure. To claim it, you need to provide documentary proof, including a formal rent agreement, rent receipts and landlord's PAN (if annual rent exceeds Rs.1 lakh), to the employer, besides actually staying in a rented usage of fake or incorrect PAN details can be easily detected via PAN verification systems, while any mismatch in the rent paid by you and that received by the landlord is bound to get a tax notice. Another red flag for the tax authorites is a mismatch in the rental address and the one linked to Aadhaar or other official an employee fails to declare or submit proof to the employer, he can still claim HRA exemption at the time of filing returns under Section 10(13A). 'However, tax authorities could audit the return to verify the claim. So, preserve supporting documents, such as rent agreement, rent receipts, bank statements reflecting the payment of rent, and where the rent paid exceeds Rs.50,000 a month, evidence of tax deducted at source by the employee,' says Kumar.'You cannot claim exemption if you stay in your own house or with parents, unless you pay them rent with a valid formal agreement and genuine bank transactions for rent transfers,' says the taxpayer pays rent but doesn't receive HRA from employer, a separate deduction under Section 80GG is available up to Rs.5,000 a month, but is subject to You have no formal rent agreement. You have no proof of bank transactions. Incorrect PAN of landlord (for over Rs.1 lakh a year rent). Rental address is not authentic. Your HRA claim differs from that of employer. How it's caught It may not always be mandatory, but its absence can raise suspicion. Tax department can check bank statements. It's easily caught through PAN verification. Mismatch with address in Aadhaar card or other official records can catch it. Employer submits details of HRA exemption in Form 16. The following alterations need to be incorporated by taxpayers in their returns this year. Capital gains & IT formsTaxpayers who have long-term capital gains of up to Rs.1.25 lakh and are not carrying forward capital losses can now file using simpler ITR 1 form, instead of the previously mandated complex ITR 2 or ITR 3 forms. This is after the increase in LTCG exemption limit on listed equity shares and equity-oriented mutual funds from Rs.1 lakh to Rs.1.25 lakh in a financial year. Capital gain split From 23 July 2024, the LTCG on listed equity shares and equity-oriented mutual funds will be taxed at 12.5% without indexation, from 10% earlier, while the short-term capital gains (STCG) will be taxed at 20%, from the earlier 15%. Taxpayers will have to bifurcate their gains based on whether the transfer occurred before or after this date. Buyback as dividend Buying back of shares on or after 1 October 2024 will be considered as dividend in the hands of shareholders and should be reported as 'Income from other sources', instead of capital gains. It will be taxed at applicable slab rate without any deduction of the cost of acquisition. TDS schedule This year, you will need to mention the TDS section under which tax was deducted for income in 2024-25 if you are using forms ITR 1, 2, 3, or 5. Actual Aadhaar You can file the tax returns this year for forms ITR 1, 2, 3 and 5 using only the actual Aadhaar number, not the Aadhaar enrolment ID. Updated return timeline The timeline for filing updated returns (ITR-U) has been extended from 24 months to 48 months. Asset-liability threshold The threshold for reporting assets and liabilities in the tax return has been increased from Rs.50 lakh earlier to Rs.1 crore now. Disability certificate For disabled individuals, taxpayers could earlier claim deduction under Section 80DD or Section 80U in the old regime by quoting Form 10-IA. Now, they will have to give acknowledgement number of disability certificates as well.
