Introduction
A responsibility of the employer under Section 192 of the Income Tax Act 1961 when applicable is to deduct tax for their employees and file the same. This information is made available to the employees in the form of Form 16. Form 16 is a TDS Certificate that contains the taxable income and TDS of the individual. The employees are responsible for informing their employers of the additional incomes or deductions so that the tax deducted can be as accurate as possible in matching the ultimate tax liability of the employees.
Therefore, Form 16 is important for employees when filing their returns. However due to unforeseen circumstances, if Form 16 is not available when the salaried individual is filing their return the read on. In such a case, it is important to remain calm and understand that there are ways the income tax return can be filed without the availability of Form 16.
Payslips and evidence of other sources of Taxable Income
One of the major incomes taxable for a salaried individual is their salary. This can be ascertained by gathering all the payslips falling within the taxable period of 1st April to 31st March of the financial year.
The Net Salary from all the payslips from all the employers during the year is to be added to determine the taxable income for the relevant financial year.
The taxpayer should also examine if there are other sources of income like rent received from own property, Interest from fixed deposits or dividends from shares or units of mutual funds etc. The best place to gather this information is the Annual Income Statement, AIS. Interest income from banks or share incomes is usually reported by the entities and is reflected in the taxpayer’s AIS.
Thus the Taxable Income is to be determined first.
Form 26AS and AIS for Tax credit
Form 26AS displays all the tax that has been deducted and paid on behalf of the salaried individual. The tax that has been deducted by the employer and paid to the authorities is displayed in this form. The income and TDS claimed by the taxpayer in their Income Tax return have to match with the same amounts reflected in Form 26AS. Any discrepancies must be rectified by the employer as soon as possible. The request for rectification should be made by the employee as soon as a difference is noticed.
Claim House Rent Allowance(HRA)
Employees who receive a House Rent Allowance in their salary should ensure they claim the HRA deduction available. For this, the taxpayer is to submit the rent-paid receipts to the payroll department and comply with all the other requirements. The claim can also be made while the return is being filed by the employee. To learn more about House Rent Allowance, click here.
Claim all the Deductions
There are several deductions that a taxpayer can claim within the Income Tax Act 1969 and one should ensure all of these are being claimed to minimize the tax liability. Tax planning is an important task for every taxpayer. Some examples:
- Section 80C: Up to Rs 1,50,000 deduction for Life Insurance Premium or contributions to PPF or various investments like Equity Linked Savings Scheme etc.
- Section 80D: Deduction available up to a certain limit on Medical Insurance Premium paid.
- Section 80E: Deduction available for interest on education loan paid.
For more, refer here.
Compute Tax Liability
Once all the incomes are gathered and deductions claimed, the tax liability of the salaried individual is to be calculated. Once the Tax Liability is calculated, the Tax Credit is to be adjusted.
- Any excess of Tax credit over Tax Liability is the refund to be claimed in the return.
- Any excess of Tax Liability over the Tax Credit signals there is a shortfall in tax paid, and the additional tax is to be paid by the salaried individual.
Example:
| Tax Liability(with cess) | Rs 1,25,000 |
| TDS | Rs 1,15,000 |
| Additional Tax | Rs 10,000 |
If the situation were reversed, a refund of Rs 10,000 can be claimed and the Income Tax Return be filed.
File Income Tax Return
After all this process is done, the taxpayer should ensure the Income Tax Return is to be filed on or before the due date as applicable and that any additional tax has been paid.
The due date for salaried individuals not eligible for audit is usually July 31st 2024 for the Income Tax Return of Financial Year 2023-24.
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