Income
The document helps taxpayer identify various income heads at the time of filing of income tax returns, or ITR. If you want to know your income details and have Form 16 with you, refer to Part B. There you will find salary, value of perquisites, profits in lieu of salary, allowance. All these together form your gross salary and indicate your income. Form 16 is a proof of tax deducted at source, or TDS, that your employer gives you at the end of the year. Your employer cuts TDS from your salary every month and submits the amount with the government. Form 16 serves as a certificate for income tax paid.
Deductions
You are entitled to get certain tax benefits in the form of deductions which gets reflected in your Form 16. You can avail of tax deduction of Rs1.5 lakh under section 80C if you invest in instruments such as equity linked-savings scheme mutual funds, public provident fund and life insurance premium. A standard tax deduction of Rs40,000 was introduced in Budget 2018. You should know, with this, the government has scrapped medical reimbursement and transport allowance. This year, you have less paper work as you no longer need to submit bills for medical and transport claims.
Use in ITR
If you are filing ITR, keeping your Form 16 handy will make the process much easier. If you plan to file your ITR by yourself, from this year, you will have to provide a break-up of your salary in the ITR. You can easily access the break-up of your salary in Form 16. If you have changed jobs in a single financial year you will have two Form 16— from the current and the previous organization. Make sure that you cross-check both the documents while you file your ITR to avoid any kind of discrepancy in the information that you provide to the tax department.
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