Form 16 is a certificate issued by your employer and it holds the information you need to prepare and file your income tax return. CBDT notified last month, few amendments in ITR forms for Assessment Year 2019-20. This is being seen as another bid to increase transparency & minimise tax evading.
Here are the few focal point of the new Form 16.
· Education Cess is now to be called Health and Educational Cess.
· Form 16 usually contains the aggregate amount of salary and deduction. But from now on, employers will have to include details of salary components and deductions. Therefore, the list of allowances exempt u/s 10 must be reported specifically line by line. The shall include Leave Travel Allowance, Death cum Retirement Gratuity, Commuted Value of Pension, Leave Encashment, and House Rent Allowance (HRA), among others.
· Employees will be required to divulge details of loss or gain (& income) from house property, and other sources to their employer. This was not mandatory in the past.
· Apart from standard deduction, other deduction must also be specifically reported like deduction under sec 80CCD (1B), sec 80CCD (2), sec 80D, sec 80E, 80G & sec 80TTA. For example, deduction for the payment of health insurance premium under 80D or deduction for donations contributed under 80G.
· Also, any appropriate ‘Rebate’ or ‘Surcharge’ must be reported in the form if applicable.
· Employers would now be needed to indicate the particulars of the amount of salary received by the employee from other employers separately. These details will be specified in Form 12B under section “Reported total amount of salary received from other employers”.