By Rushabh Vora and Mansi Almeida
With the due dates to file for income tax return assessments for the year 2018-19 round the corner, taxpayers are gearing up to comply with the deadline. A major number of taxpayers filing their returns are salaried class employees and for such employees, income and Form 16 go hand-in-hand.
What is Form 16?
Form 16 is a certificate issued by an employer, which provides evidence for the tax which is deducted by the employer from your salary and deposited with the Government Treasury. This form is divided into two parts the first provides a summary of income credited to an employee and taxes deducted thereon, while the second provides a detailed break-up of salaries paid (excluding taxable component). Thus, Part B of Form 16 aids a taxpayer to compute his taxable salary for the purpose of filling a return. Any employer who has deducted taxes from your salaried income is required to issue a Form 16 by June 15 of the financial year.
However, often several employees experience a delay in receiving the Form 16 from their employer leaving them unable to file tax returns. It is important to note here that while Form 16 makes the process of filing returns easier is not a mandatory document required to file your income tax returns.
How to file returns without a Form 16?
If you are filing your tax returns without Form 16, details of taxes deducted on salary income should be taken as per Form 26AS, which will reflect actual taxes deducted by the employer. Form 26AS is usually a replica of a tax deduction certificate provided on the amounts received by a taxpayer. However, in the case of salary payments, Form 26AS may show only gross salary and may not capture the allowances as done by Form 16. Thereby, taxable salary must be computed by the taxpayer after reviewing pay slips and salary structure as finalized in the appointment letter from your employer.
In addition to the allowances claimed while computing salaried income, the taxpayer must carefully claim all eligible deductions from his total income (which would otherwise be factored in his Form 16). One must ensure to claim a deduction of principal and interest on housing loan repayment as per certificates obtained from the bank for the entire financial year.
After considering all the above aspects, additional tax (if any) ought to be paid as a self-assessment tax followed by e-filing the return of income documents. For salary income, a taxpayer can file any of ITR forms 1, 2, 3 or 4 (depending on the nature of other incomes which he earns in addition to salary income).
What if the employer has deducted your taxes and has not deposited with the government treasury?
If an employer deducts your taxes but fails to deposit the same with the government treasury it will not appear in your Form 26AS, however, as per a circular issued in 2015 by the Central Board of Direct Taxes, as per section 205 of the Income-tax Act, 1961 even if the employer fails to deposit the tax which has been deducted by the employees salary the credit will not be denied to the taxpayer. However, in such cases, it is advisable that the taxpayer preserves the pay slip wherein deduction of taxes from his salary is reflected.
Furthermore, even if taxes have been deducted and deposited, but have not been filed in the form of quarterly e-TDS returns, they will not appear in your Form 26AS. In such a case, if evidence of tax deduction can be collated from the employer and produced before the tax officer, one should be able to get the intimation rectified to factor in the differential in TDS credit.
Hence, while Form 16 is of utmost importance while declaring incomes from salary, if it is not available, you can still file your returns by following the above guidelines.
Rushabh Vora is an assistant manager and Mansi Almeida is a senior associate at N A Shah Associates LLP