Switched your Job multiple times? Align all Form 16s to ensure correct Income Tax Filing

Form 16 serves an essential role for taxpayers to accurately file their income tax returns (ITR). This form, issued by employers, displays the tax deducted at source (TDS).

Employers must issue Form 16 to employees by June 15 of each financial year, according to Rule 31 of the Income Tax Rules. For example, by June 15, 2024, Form 16 for the financial year 2023-24 should be given.

Form 16 contains information on salary income, deductions, and exemptions.

Section 203 of the Income Tax Act of 1961 requires every employer acting as a tax deductor to provide employees or deductees with a certificate outlining the deducted tax amount, rate, payment date, salary computation, and so on.

Form 16 is composed of two parts – Part A and Part B. Part A contains important data such as taxpayer and employer information, service duration, and amount of tax deducted. Part B details the tax computation conducted by the employer.

Check the details of Form 16

Employees must first verify essential information, such as their Permanent Account Number (PAN) and the employer’s PAN and TAN.

Form 16 and Form 26AS should have similar TDS information. To verify correctness, compare the TDS deductions in Form 16 to the entries in Form 26AS. Form 26AS may not indicate the tax deducted by the employer if the PAN is wrong, which may affect the employee’s tax credit claims. And ensure that all tax deductions are credited.

Verify salary information, such as salary components (basic, allowances, and benefits). Ensure that deductions under Sections 80C, 80D, and so forth match investment proofs. Check for relief under Section 89 and confirm that any relief for salary arrears is accurately reflected.

Tax-saving deductions and exemptions claimed are not always correctly reflected on Form 16. In case of a difference in the details, the employee may request that the employer update their TDS returns and give them an updated Form 16 after correcting the error.

What to do if you have multiple Form 16s?

When an employee switches jobs within a year and has multiple Form 16, he/she should share his/her former salary information with the new employer to ensure an appropriate tax calculation. If not done, the employee will be required to pay taxes upon filing the ITR.

Tax liability arises at the time of ITR filing since each employer includes exemptions and deductions in their calculations, which are claimed twice a year. When calculating the taxes for ITR filing, the details of all Form 16s must be combined. Deductions and exemptions should then be evaluated to determine the tax liability. In addition, incomes too must be merged.

To calculate your annual income, add the income from all employers. Exemptions including the house rent allowance (HRA), leave travel allowance (LTA), and standard deductions should not be repeated.

Deductions must be limited to the amount allowed for a single taxpayer. Though standard deduction may be listed separately in all forms, remember that it can only be claimed once.

Keep Some Documents safe with Yourself

Keep all Form 16s and other related documents ready in case the taxman asks for them.

If no tax is deducted, the employer is not required to issue Form 16, although employees may request Form 16 Part B to facilitate tax filing.