form 16 details to file income tax returns

form 16 details to file income tax returns

form 16 details to file income tax returns

Form 16: First time filing income tax returns?

The process of filing income tax returns has been started, amid the process the government making Aadhaar card mandatory to file income tax returns.

PAN number is mandatory to file income tax returns. The government has announced on March 21 that it has made Aadhaar card mandatory to file ITR.

If you are filing your income tax returns first time then you must need to know about the very important form: Form 16.Most of the time especially salaried employees who are filing their income tax returns first time don’t know what to do or figure out with the form- 16 when their employer hands over this form to them.

We will discuss Form 16 in detail which will help you to understand the benefit and importance of this form.

What is Form 16?

Form 16 is a certificate issue by your employer every year. Form 16 is a certificate under section 203 of the Income-Act, 1961 which certifies that TDS has been deducted from your salary by the employer.

According to the income tax rules of India, if an employer deducts TDS on salary then he must issue income tax Form 16.

Understanding the content of Form-16, it will help you to file your income tax returns.

Form 16 has two sections: Part A and Part B.

Form 16 Part A:

Part A consists of your personal details such as your name and address, your employer’s name and address, PAN of both, employer’s Tax Deduction Account Number (TAN) and other. This detail helps the I-T department track the flow of money from you and your employer’s accounts.

Details Required

• Name and address of the employer.
• PAN of the employee.
• TAN and PAN of employer.
• Summarily of tax deducted and deposited quarterly, which is certified by the employer.
• Assessment Year.           
• Period of employment with the employer.
• Part A of the form 16 has a unique TDS certificate number.

It gives the summary of the TDS by the employer on behalf of the employee. This is the amount that the employer deducts from your salary as tax periodically and credits to the I-T department. For example, if every month your employer deducts Rs.3, 000 as tax from your salary, it will be shown in the Form 16 as deposited by your employer to the government.

Form 16 Part B

Part B of form 16 include most of the details that you need to file I-T return, such as salary paid, other income, tax deducted and more.

Details Required

• Taxable Salary
• Deduction allowed under the income tax act
• Breakup of Section 80C deductions.
• If you held more than one job during the year, you will have more than one Form 16.
• Part B is prepared by the employer manually and issued along with Part A.

Deductions are mentioned in the form 16 Part B. These include those under sections 80C, 80CC and 80CCD.Remember the aggregate under amount deductible under these three sections should not exceed Rs.1 lakh. Then come the deductions under other sections such as 80D (health insurance premium), 80E (interest on education loan), 80G (Donations), and others.

While all deduction related details are mentioned in Form 16, you should cross-check the amounts with your investments and other documents.

Form 16 is one of the documents that you need to keep handy before or while filing your income tax returns, which has to be done till 31 July.

In case of any error in Form 16 then you have to contact to your employer for rectify the error as he is the one who issue the form.

One important thing to remember that form 16 only declares TDS from salary. For other incomes, there are other forms, income from bank fixed deposit will in Form 16A.So, if you have interest income from Bank FD, then you will have to get Form 16A from the bank.

Another important form is Form 26AS, the tax credit statement. It will help you verify details of TDS. Using this form you can check if your company or bank has indeed paid the tax correctly reported to the I-T department.

To file your income tax returns you can upload your Form 16 on TruTax. Filing ITR on TruTax is simple, convenient and takes 5 minutes to complete the process. If you are filing your income tax returns then you can contact us for any taxation advice.

Upload your form 16:

http://www.trutax.in/

Checklist of documents required for E-filing income tax return

The due date for filing income tax return is nearing which is 31st July so you need to know about the various important documents required in details for filing your income tax returns.

Have you collected all the documents required for filing income tax returns? If not, then you should do it as early as possible to meet the deadline of due date before it gets too late for the process. We should avoid rush up the things at the last moment for filing income tax returns as it only makes the things complicated.

We are mentioning all the important documents required while filing your income tax returns.

Form-16 received from your employer:

Form-16 is applicable only for salaried employee. If the taxpayer is a salaried person and employer has deducted TDS on your salary then he will issue you Form-16.

Form 16 A received from Banks:

Form 16 A is the TDS certificate regarding tax deducted at source by other deductors like banks or other institutions on the interest/commission that you have earned during the year.

PAN card:

This is a very important thing which is required while filing your income tax returns.

Bank Statement:

• Interest income statement for fixed deposits
• TDS certificates issued by banks and others.
• Bank statement/passbook for interest on savings account.

Investment Proof

If you have done investment under Section 80C then you have to submit Section 80C documents. Investment options under section 80 C like PPF, NSC, ULIPS, ELSS, and LIC qualify for deductions.

Home loan certificates:

If you have taken any home loan for buying your house, you should collect all the documents and home loan details, interest certificates.

Advance Tax:

If you have paid any self-assessment tax or any advance tax, you need the respective challan to fill in the respective details in your income tax return or ITR form.

Property Details:

If you have bought or sold any property during the financial year, you need to have details while income tax returns.

Form 26 AS:

It shows tax deducted and deposited on your behalf by the deductors, details on tax deposited by taxpayers and tax refund received in the financial year.

So keep these important documents and filing income tax returns will be an easy task for you. You can also contact a tax professional throughout the process which will make the filing tax returns process smoother.

You can upload your form-16 on TruTax portal which makes the filing of income tax returns very easy, convenient and fast.

Upload your form-16

http://www.trutax.in/

Planning to Invest in stocks,mutual funds?

The start of a new financial year presents an opportunity to relook at your investment goals.Before making fresh investment, you must consider the tax implication involved.If investing in equities is one of your goals,you can do so via direct equity purchasing or through mutual funds.

You need to understand the tax implication involved in equity investments.

Investing in mutual funds:

Mutual funds are sold with fancy names which can be confusing for many.To find out how gains from sale of mutual funds are taxed, you can follow a simple principal.Find out where your mutual fund primarily invests.A mutual fund is either equity-based or debt-based.Equity funds invest at 65% of their holdings in equities.All others are debt funds.Equity funds are taxed excatly the same way as gains from direct purchasing of equity shares.

Debt funds are short-term when sold within three years of holding them.Short-term are taxed like any other income, basically as per tax slab rates applicable.

When debt-funds are sold after three years of holding, gains are considered long-term.Long-term gains from debt funds are taxed at 20% and the purchased price is indexed for calculating gains.Which means you have to multiply purchase price with CII of the year of sale and divide it with CII of the year of purchase.CII is the cost inflation index and it helps align your cost according to inflation.Earlier taxpayers has a choice of indexing the cost, but effective july 11,2014 , indexation of cost is mandatory to calculate long-term gains from debt funds.

Investing directly in stock markets.

 

When you purchase equity shares from a stock exchange, calculating tax on gains is fairly simple.You don’t have to pay any tax on gains from sale of equity shares held for more than 12 months. If you incur a loss, such a loss has no tax treatment.

When equities are sold within 12 months of holding them, your gains are considered short term.Short term gains taxed at 15%.This special rate of 15% applies irrespective of your tax slab.Also if your total taxable income without including short-term gains is less than the minimum exemption limit i.e. Rs 2,50,000- you can adjust this shortfall against your short term gains.

Remaining short-term gains shall be taxed at 15% +3% cess.If your total income including short-term gains is less than Rs 2,50,000 you do not pay any tax.Any short-term loss can be set off against short-term capital gains or long-term capital gains from any capital asset.If you have not been able set off this loss entirely in the year it is incurred, you are allowed to carry it forward for eight years.You can then adjust it from your short term or long term capital.

Dividend income from equity shares is exempt from tax, unless your dividend income exceeds 10 lakh in a financial year.If so, such excess(and not total dividend) is taxed at 10%.

How to e-file your income tax returns?

An income tax is a tax imposed on individuals or entities that varies with income or profits of taxpayer.An income tax is a tax levied by the government on the income you earn.This income can be in the form of your salary,any consulting or project work that you do or a business you carry out.You are required to pay tax on the sum of all income earned by you through a financial year.

Income tax rate changes as per different income levels.These income tax levels are called tax slabs under which the minium tax required to be paid is zero and the maximum is 30%.As your income increases, the amount of tax you have to pay also increases.This is the basic idea behind income tax.

Income tax return is a declaration you file regarding your income and financial transactions undertaken during the tax year.Income earned between 1 April 2016 and 31 March 2017, the income tax return has to be filed between 1 April 2017 and 31 March 2018.

The first step to file income tax returns is to gather the required documents.

• Form 16 if you are a salaried employee.
• Details of other income that you have earned.
• Details of income earned from investments.
• Details of tax-saving deductions you wish to claim.
• Profit and loss statement if you run a business.

To file your income tax returns, you will also need to have PAN and Aadhaar.The government has made it mandatory to have Aadhaar to file income tax return from 1 july,2017.

You need all of these document to fill in the income tax return form, but the documents do not have to be submitted along with the income tax return.You might need to furnish the documents if they are asked for by the tax department at a later date.

The following are the ITR form used to file income tax returns:

ITR-1:One page form for those who have income up to Rs 50 lakh and income from one house property.

ITR-2:Applicable for those who have income from salary,house properties as well as income from capital gains,partnership firms,foreign assets etc.

ITR-3:Applicable for those who have income from business or profession.

These are the primarily used used ITR forms.There are other ITR forms as well that are required to be used for anyone with complicated sources of income.

For detailed information about ITR forms,check it out: http://www.trutax.in/charts/which-itr-to-file

To e-file income tax returns: http://www.trutax.in/upload-form-16

Benefits of filing income tax return

According to the Income Tax Act,1961 filing of your income tax return (ITR) is mandatory. If someone’s income exceeds the maximum amount not chargeable to tax, one is required to file income tax return. Similarly, filing ITR is mandatory for ordinary residents having overseas assets or in case certain exempt income exceeding specified threshold, etc. However, in addition to the same being a requirement under the income tax laws, you also stand to benefit in the following ways from filing your income tax return, even if your income is not taxable.

Refund of TDS: In case tax has been deducted at source(TDS) by the person paying your remuneration, you may need to claim the same as a refund from the tax authorities depending upon your taxable income. In order to claim such refund of TDS, you would be required to file your income tax return.

Claiming additional deduction: If you are a salaried individual, your employer would have deducted TDS from your salary.

Carry forward losses: If you have incurred a loss from specified sources of income ( i.e. house property income, loss from business/profession), you can carry forward the same to subsequent 8 years for set off against other income from the same head of income. You would be eligible to claim such carry forward of losses and set off in subsequent years only if you have filed your return within the prescribed due dates.

Avoid Penalties: From FY2017-18, if you were required to and did not file a tax return you are required to pay a fee up to Rs 10,000 for non-filing of the tax return.

Avoid additional interest: If any taxes are payable (over and above the TDS and other payments made) by you, a belated return can invite additional interest at 1 per cent per month for the balance tax payable.

Easy Loan Processing: It is generally observed that various financial institutions/banks insist on tax return copies filed while processing applications for the housing loan, education or vehicle loan etc. Generally, income tax returns of the last three years are required for taking any big loan.

Processing Credit Card applications: Further banks/financial institutions may also consider copies of tax returns as evidence while processing credit card applications.

Proof of residence: If you have been filing your returns and a tax assessment order is passed for any year, the said assessment order can also be used as a proof of residence for applying for Aadhaar or passport.

Fake rent receipt won’t help you to claim tax deduction

People who are using fake rent receipt to save taxes on income tax may be in trouble now.Submitting fake rent receipt to your company’s human resources can put you in trouble with income tax department.A salaried employee receiving “house rent allowance” from the employer could escape paying tax on at least  60% of this amount by generating fake rent reciept.

The income tax department now has good reason to insist on proof from the taxpayer showing that he is indeed a genuine tenant,staying in the property in question.The income tax department may soon be asking for proof to check whether the taxpayer claiming tax deduction under HRA is staying at the rented property.

The tax deduction on HRA is the amount that that is the minimum under these three options:

• Actual HRA that you get.
• 50% per cent of your basic salary and dearness allowance if you are living in a metro(it is 40 per cent if you are living in a non-metro city).
• Actual rent paid by you is 10 percent of the salary.

Till now, to avail of the benefit, the PAN of the owner of the residence was one needed in case the rent is above Rs 1 lakh per annum.But now the official can ask for proof even if it is below Rs 1 lakh.In this year’s annual budget, the Finance Minister had proposed that those who are claiming a House Rent Allowance(HRA) of more than Rs 50,000 per month will have to deduct tax at source at the rate of five percent.

According to a recent tribunal ruling the assessing officer can now demand proof-such as leave and licence agreement,letter to the co-operative society informing about the tenancy,electricity bill,water bill etc.- in allowing a lower taxable income as computed by a salaried employee.In case of HRA exemption, the assessing officer may crosscheck the address mentioned in the ITR form is the same as property on which rent is paid.

Become cashless.As far as possible do pay rent in cash.Even if you are paying electricity and water bill,we suggest you to pay through bank.Preserve the copies of water,electricity bill and rent receipts.But if you still have to pay in cash then put a stamp of Re 1 on the rent reciept.This documentation is a must while claiming HRA.Whenever you take a house on rent,take one step furthur and sign a rent agreement with your landlord.Ensure all the details of your terms with your landlord  should be stated very clearly in the agreement.

Claim correctly in your income tax return.

The tax department is increasingly leveraging technology to keep a watch on tax-payers.In case you had claimed fake HRA,then avoid trouble at the time of filing your income tax return.So when you are filing your income tax return pay the tax that you had saved under the curtain of fake rent receipt.

Latest Income Tax rules and updates

The finance bill 2017 was approved by parliament on March 30.

The finance bill 2017 was passed with some sweeping changes to country’s existing tax system. All the provisions related to taxation and government spending Finance minister Arun Jaitley proposed in Union Budget 2017 have come into effect from April 1.

Here are few things to know when you will file your income tax returns and apply for important documents like PAN and Aadhaar Cards.

• Instead of raising income tax limit the government opted for a reduction in income tax rate. There will be only 5 percent tax on an income from Rs.2.5 lakh to Rs.5 lakh.

• The government has decided a 10 percent surcharge for an income Rs.50 lakh to Rs.1 Crore. There will be no change in present surcharge of 15 percent for individuals whose income is more than Rs.1 Crore.

• Aadhaar, a unique identity has been made compulsory for applying for a PAN card and filing for income tax returns. This has been mooted to avoid duplicity in filing of income tax.

• The government has put a limit on cash transactions to prevent occurrence and recurrence of incidents of black money.

• CBDT has come up with new seven income tax returns form.

• Under the amended rules, Tax commissioners have been enabled with sweeping powers.

• The amended tax rules grant immense powers to tax authorities retrospectively.

• An individual taxpayer will have to minus a tax deducted at source (TDS) of 5 percent on rental payment of more than 50,000.

• Under amended tax rules, there will be no tax on partial withdrawal of money from National Pension System funds. Those who put savings in NPS can withdraw 25 percent of their total savings before retirement.

• According to the new rules property will come under the purview of long-term gains only if the holding period for that property was two years. Earlier, the holding period was three years.

Latest Income Tax rules and updates

Latest Income Tax rules and updates