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Changes in Form 16 for FY25: What salaried individuals need to know

As the tax season rolls in, salaried individuals will notice a refreshed look in their Form 16, the key document used for filing income tax returns. Though the Central Board of Direct Taxes (CBDT) had already notified the revised format through a salary circular on February 20, its impact will now be felt in full as companies begin issuing Form 16s for the financial year 2024-25 (assessment year 2025-26). Form 16, issued under Section 203 of the Income-tax Act, is a TDS certificate that outlines the total income paid and tax deducted by an employer during the year. With the latest revisions, the government aims to make salary disclosures more transparent, help taxpayers avoid filing mistakes, and promote smoother reconciliation with other tax records. According to Tarun Garg, director, Deloitte India, these updates offer greater clarity to employees and simplify the overall tax filing process. What's new in Form 16? Garg highlights several significant changes introduced in the updated format: · Tax regime mentioned upfront: The chosen tax regime (old vs. new) is now clearly stated in Part B of Form 16. · Inclusion of Form 12BAA details: TDS and TCS amounts disclosed through Form 12BAA by employees are now considered in the final tax calculation. · Clearer salary structure: Gross salary is itemised, and perquisites are now reported separately via Form 12BA. · Detailed deductions and exemptions: Tax-free salary components like House Rent Allowance (HRA) are listed distinctly. Deductions under Sections 80C, 80D, and 80E are itemised, and a new section, 80CCH for Agniveer Corpus Fund contributions has been added. What does this mean for salaried taxpayers? 'The revised Form 16 provides a comprehensive snapshot of one's salary, deductions, and tax computation,' Garg explains. 'This makes ITR filing more accurate and reduces errors. It also helps in detecting cases where excess TDS may have been deducted,' he adds. More responsibility for employers Employers will also need to adjust their reporting. 'Form 24Q has been updated, introducing Column 388A in Annexure-II to capture TDS or TCS by others,' says Garg. This change ensures uniform reporting across Form 16, Form 24Q, and the ITR. Reconciliation simplified, but not automatic While the revised Form 16 aligns better with Form 26AS and AIS, Garg cautions that salaried individuals must still cross-verify all data manually before filing their returns.