Tax Filing 2025-26: Form 16 Gets An Upgrade -- What Salaried Taxpayers Need To Know

Salaried individuals who record income taxation returns annually should return statement of cardinal changes introduced by nan Income Tax Department successful nan format of Form 16—the archive that outlines salary, taxation deductions, and exemptions. The caller building is aimed astatine improving transparency and simplifying nan return-filing process.

What is Form 16?

Form 16 is issued by employers arsenic impervious that taxation deducted astatine root (TDS) connected net has been deposited pinch nan government. It provides a broad summary of an employee’s income, nan TDS deducted, and nan various deductions and exemptions claimed nether nan Income Tax Act.

What’s changed successful Form 16?

The revised Form 16 is now much elaborate than before. While earlier versions included only nan basal information, nan updated format breaks down net components and deductions much clearly. Taxpayers will now beryllium capable to easy place which net components are tax-exempt, really overmuch has been deducted nether each section, and which perquisites aliases benefits are taxable. This level of clarity is expected to make it easier to record meticulous returns and debar errors that whitethorn pull scrutiny.

Breakdown of Form 16: Part A and Part B

Part A includes:

Employer’s PAN and TAN details

Total TDS deducted

This conception is generated from nan TRACES portal

Part B includes:

A complete breakdown of net components

Details of exemptions and deductions nether various sections (like 80C for investments, 80D for wellness insurance, 80E for acquisition loans, and 80G for donations)

Why do these changes matter?

The updated format is designed to make nan taxation filing acquisition smoother for salaried taxpayers. With much transparent reporting, labor are little apt to make mistakes connected their ITRs. It besides reduces nan chances of receiving a announcement from nan taxation section owed to mismatched aliases incomplete information. In short, nan caller Form 16 is simply a measurement toward amended compliance and easier taxation filing.

The implementation day for these changes is 20 February 2025. Effective immediately, these caller rules will effect taxation returns for nan financial twelvemonth 2024-25 (Assessment Year 2025-26).

Additionally, Form 24Q has been updated pinch nan summation of a caller file - 388A. This update intends to streamline nan reporting of TDS and TCS for companies, ensuring meticulous taxation specifications for employees.

One notable alteration successful Form 16 is nan inclusion of immoderate authorities deposits successful nan "Agniveer Corpus Fund" arsenic portion of an Agniveer's net nether nan Agneepath scheme. However, taxation exemption connected this magnitude is disposable nether conception 80CCH.

It is important to statement that definite accommodation will now beryllium taxable to taxation.

If you person rent-free accommodation from nan company, it will now beryllium classified arsenic a installation (Perquisite) and whitethorn beryllium taxable to taxation.

Published on: Apr 24, 2025 2:37 PM IST