As per income tax rules, every employer must issue Form 16 to employees with income subject to TDS. But there can be instances of Form 16 not issued, such as when income is below basic exemption, or a taxpayer has switched jobs and not received Form 16 or, an employer is winding up business.
The deadline for filing income tax returns is fast approaching and it’s never good to wait till the last minute. Filing of ITR becomes effortless for salaried people if they have received Form 16.
Form 16 is a certificate provided by the employer to employees with details of tax deducted at source (TDS) and break up of salary component. As per income tax rules, every employer must issue Form 16 to employees with income subject to TDS. However, there can be instances of Form 16 not issued, such as when income is below basic exemption, or a taxpayer has switched jobs and not received Form 16 or, an employer is winding up business.
Before proceeding, you must know that Form 16 only simplifies the filing of return and is not mandatory. So, if you haven’t received your Form 16 because of any such reason, there is no need to panic, you can still file you returns on time basis the steps mentioned below.
Step 1: Determine income from all sources
First, you need to determine income received from all sources in the financial year. You must include incomes earned from sources such as:
Salary and Pension: “You will need to provide a detailed breakup of your salary like gross salary, perquisites, allowances, etc., for filing ITR. You may check your payslips for this purpose. Now, take down the net salary from all the payslips you have received from your employer in the financial year. In case you have switched jobs in the relevant financial year, consider the payslips from all employers with whom you have worked,” said Archit Gupta, Founder and CEO, ClearTax.
Income from house property: If you have any rented house property, please report annual rent income under house property income.
Capital Gains: In respect of long term or short-term capital gain on any house property, you must derive an accurate calculation of gains by taking account of indexation benefit in case of long-term gains. “For calculating capital gains, you need to have purchase deed, sale deed along with receipts of stamp duty, brokerage, registration charges, etc., paid on hand. In the case of capital gains related to stocks and mutual funds, you must get a detailed summary of such gains and losses from your broker. Long term capital gain on stocks up to ₹1 lakh is exempt, whereas short term capital gain will be taxed at flat 15%,” Gupta said.
You must know that if you have any capital gain income or loss to be carried forward, ITR 1 cannot be filed. In such cases, ITR 2 or ITR 3 will be applicable.
Income from other sources: Income from saving bank interest and fixed deposit (FD) interest, interest on refund, etc., are covered under this head. Please obtain FD slips and interest certificates from the bank for recording interest income from FD. Some banks provide these details on their internet banking portal also which can be easily obtained by logging in to your net banking account. For saving account interest, you must add the interest credits by the bank in all saving accounts.
Step 2: Obtain Form 26AS
The TDS deducted on your income mentioned in salary slips should be cross-checked with the TDS amount mentioned in your Form 26AS. Form 26AS can be downloaded from the TRACES website of the income tax department.
Form 26AS is an annual credit statement issued by the tax department. Form 26AS can also be termed as an annual tax statement.
Step 3: Claim Deductions
Make sure to claim various payments and investments as deductions from income while paying income tax.
Salary slips will contain information concerning PF deducted, TDS and so on which should be claimed as a deduction. Gupta said, “When you claim a deduction for Provident Fund (PF), make sure you claim only the contribution made towards the PF and not your employers’ contribution. Keep investment proofs of ELSS, LIC premium receipts, receipt of tuition fees of children paid handy for claiming deduction under Section 80C of Income Tax Act. If you have made a payment of medical insurance for your family or dependent parents, please obtain the receipts and claim the same under 80D deduction.”
Step 4: Claim HRA and other exemptions
House Rent Allowance (HRA) can be claimed if it is received as a separate component in salary slip. To claim the HRA deduction, you must submit your rent receipts to the payroll department of your company. Even if you haven’t submitted the receipts to your employer, you can still claim it while filing ITR.
Also, remember to avail the exemptions like Leave travel allowance (LTA), standard deduction of ₹50,000 from salary etc.
“If you receive a rental income from house property, a flat 30 per cent deduction is allowed from this rental income. In case of self-occupied property on a home loan, remember to claim the home loan principal under 80C and interest deduction up to ₹2 lakh allowed under house property income,” said Gupta. You can also remember to claim saving bank interest up to ₹10,000 under Section 80TTA of the Income Tax Act.
Step 5: Compute your total taxable income
Once deductions to be claimed are determined, the total taxable income is to be computed. Total taxable income can be computed by deducting the total deductions to be claimed (as computed in Step 3,4) from the total income earned in the financial year (as computed in Step 1)
Step 6: Compute your tax liability
You can compute your tax liability by applying the relevant tax slab rates as applicable to you.
Step 7: Determine tax payable
If the TDS deducted on income is less than the tax liability as computed, the difference amount is the tax to be further paid by the taxpayer before filing ITR. However, if the TDS deducted is more than the tax liability, excess tax paid can be claimed for a refund while filing ITR.
Step 8: E-file your ITR
Once all the steps above have been completed, the taxpayer can go ahead and visit Incometaxindiaefiling.gov.in website and file their ITR without Form 16.
Step 9: E-verify your returns
Once the return is filed, remember to e- verify it. ITR filed without e-verification is incomplete and will not be considered for processing by the income tax department. “You can e- verify your return via any mode available on the ITR website. For instance, you can e- verify your return through net banking, bank ATM, demat account number, Aadhar OTP, or physical e-verification by sending a signed copy to CPC, Bengaluru within 120 days of e-filing etc.,” said Gupta.
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