The financial year ended in March and individuals are looking to file their tax returns within the due date 31st July. If you are a salaried employee, you must have received Form 16 from your employer. This is a very important form and is required when you are filing your taxes yourself or if you are taking expert help for filing your IT return. Being a salaried employee, you should be conversant with the meaning of Form 16. But what if you are not? What if you are a new employee still understanding at financial straws to make sense of filing your taxes? Wouldn’t you need help?
Of course you would! So, let’s understand what Form 16 exactly is.
What is Form 16?
Employers generally deduct TDS from your salary. In that case, the Income Tax Act mandates your employer to issue a certificate detailing the TDS deducted and deposited to department of Income Tax. Thus, Form 16 is that certificate which your employer issues detailing your taxable income and the TDS already been deducted by him.
Why is Form 16 required?
The form-16 contains the details of the TDS already deposited by your employer, so it helps you in estimation of your correct tax liability, what has been already paid and balance payable if any.
What if you don’t have Form 16?
Though it is highly not practicable, you might not get Form 16 from your employer unless and otherwise an unavoidable circumstance. This does not, however, mean that you cannot file your taxes correctly. Taxes can be filed even without a Form 16 if you know how. So, here are the steps which can be followed for filing your Income Tax Returns even if you don’t have a Form 16.
Filing income tax without Form 16
Step 1 – Accumulate (or) Consolidate all your payslips
While Form 16 lists your taxable income, the same can be found out from your Payslips as well. So, start by collecting your Payslips to figure out what your taxable income actually is.
Step 2 – Make use of Form 26AS
Form 26AS is an annual statement which shows your tax related information. It highlights the tax received by the Government through TDS deducted on your incomes from all sources. Your Payslips show the salary you received and Form 26AS shows the TDS already deducted from the salary. Both these documents can be used to find out the tax your employer or other’s already been deducted by way of TDS.
Step 3 – Compute and claim your deductions
There are various types of deductions which you can claim from your salary income. These are non-taxable items which lower your taxable income and include House Rent Allowance, Leave Travel Allowance, reimbursements, Section 80C deductions on investments, etc.
Step 4 – Add income from all other sources
Besides your salary income, you might have income from other sources as well. For instance, you might have interest income from your savings bank account or Fixed Deposit account, gains from shares and mutual funds, rental income, capital gains, etc. Add up these incomes to your salary income and identify the exemptions available for individual head of income.
Step 5 – Identify the tax filing form
You should know which tax form should be used if you are filing your taxes yourself. As a salaried employee, the relevant tax forms for you include ITR 1, ITR 2, ITR 2A, Form 3, Form 4 and Form 4A. Use the relevant form for filling up your income details. If you are using ITR 2, ITR 2A and ITR 4, you would have to provide a detailed salary break-up showing allowances and perquisites and whether or not they are taxable.
Step 6 – Compute your tax liability
After you have followed the above steps, you would have the numbers to calculate your tax liability. The next step, therefore, would be to find out what is your actual tax liability. Compare the figure with the TDS already deposited. If your TDS deposition is higher than the actual tax liability, you can claim a tax refund from the department. On the contrary, if your tax liability is higher than the TDS deposited, you would have to pay additional tax called as self-assessment tax.
Step 7 – File your return
After filling up the ITR form, submit it and file your tax return by July 31st.