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Business Standard
16-05-2025
- Business
- Business Standard
Don't have Form 16? Here's expert advice on how to file tax returns
As the July 31 deadline to file Income Tax return (ITR) approaches, some salaried employees face a challenge: what to do if they haven't got their Form 16? Form 16 simplifies the process of filing returns but it is possible to do that if you have other relevant documents. What is form 16? According to the Central Board of Direct Taxes (CBDT), 'Form 16 is a certificate issued by an employer to its salaried employee, providing details of the total salary paid and the tax deducted at source (TDS) on the employee's behalf during the financial year.' It is generated after the employer files quarterly TDS returns and is matched with the employee's PAN-based tax credit details in Form 26AS and the Annual Information Statement (AIS). What to do without Form 16 'Form 16 is derived based on the quarterly filings done by the employer, reconciled with the information in Form 26AS and the AIS. Hence, it is ideal that salaried individuals file tax returns only after receiving Form 16,' said Aarti Raote, partner at IndusLaw. But if the document is delayed or not issued, Raote advises individuals to use the following: Monthly salary slips of a financial year Year-end tax computation from the employer (if available) Forms 26AS and AIS from the income tax portal Details of any exemptions or perquisites received How to calculate income and tax liability Using the above documents, the taxpayer should: Add up the annual salary and taxable allowances Deduct eligible exemptions (HRA, standard deduction, etc.) Reconcile salary credits with bank account statements Calculate total taxable income and tax due How to verify TDS without Form 16 Form 26AS and AIS, available at Income Tax's portal, can help verify whether the employer has deposited TDS correctly. These statements are PAN-linked and reflect all tax credits and income reported. Avoid these mistakes One of the biggest risks when filing without Form 16 is under-reporting income. 'Without Form 16, the calculation of taxes is very difficult as individuals may miss some income or perquisites provided by the employer,' says Raote. To avoid errors: Match salary figures with bank deposits Cross-check TDS entries in Form 26AS and AIS Double-check exemptions and deductions claimed By being methodical and verifying all sources of income and tax credits, individuals can file their returns without Form 16.
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Business Standard
23-04-2025
- Business
- Business Standard
Tax dept tightens claims scrutiny: Key rules for rent paid to parents
Many salaried individuals claim tax exemption on house rent allowance (HRA) by paying rent to family members, such as parents. While this is legally permissible, the Income Tax Department has intensified scrutiny of such claims. Increased scrutiny Tax authorities say they have observed instances where individuals claimed HRA exemption without fulfilling rules to do so. Lack of a formal rental agreement. Rent payments made in cash, or lacking bank transaction proof. Absence of rent receipts. Landlords not declaring rental income in their tax returns. Such discrepancies raise flags, prompting the department to issue notices seeking clarification to many individuals recently. Below are the steps you can take to safeguard yourself. Steps to Ensure Compliance and Avoid Notices 1. Rental agreement: Draft a clear agreement with your relative, specifying rent amount, payment terms and duration. The document serves as primary evidence of the rental arrangement. 2. Bank transactions: Pay rent through for banking channels like electronic fund transfer or Unified Payments Interface. Avoid cash payments: they are cumbersome to trace and validate. 3. Rent receipts: Collect monthly rent receipts signed by the landlord, detailing the amount, period, and property address. 4. Landlord's PAN: If annual rent exceeds Rs 100,000, furnish the landlord's PAN to your employer. This ensures transparency and aligns with tax regulations. 5. TDS deduction: If monthly rent exceeds Rs 50,000, deduct 2 per cent Tax Deducted at Source (TDS) and deposit the amount using Form 26QC. Provide Form 16C to the landlord as proof. 6. Landlord's tax declaration: Ensure that the relative receiving rent declares it as income in their tax return. This corroborates your HRA claim and demonstrates transparency. Expert Insights "The foundation of any legitimate rental transaction is its genuineness", said Aarti Raote, partner at Deloitte India. "Rent received from close family members is subject to greater scrutiny, so it's essential to maintain proper documentation. A rental agreement and rent receipts, which align with bank payment entries, are crucial for supporting HRA claims. Additionally, the landlord's PAN must be provided to the employer when claiming HRA, and it should be included in their tax return as well." "Rent received from family members must be disclosed in the house property section (Schedule HP) of the tax return, which includes details like the share in the property and the tenant's name and PAN. This ensures the tax department can correlate the rental receipts with the HRA claim of the tenant", said Raote. If the Income Tax Department questions your HRA claim:
