Form 16 is an acknowledgement certificate issued by employers to employees when taxes are deducted from their monthly salaries. The document confirms that the tax deducted from the salary has been submitted to the Income Tax department. Form 16 also contains the details of the salary breakup and amount of tax deducted at source (TDS) for that particular financial year.
It is an essential document for salaried professionals for filing tax returns. However, employees might not receive the document if their exit formalities are not completed before leaving a job or if the employer is closing the business among other reasons. In such cases, the absence of Form 16 might make the tax filing process a little difficult but this step-wise guide will streamline the process.
Documents required to file ITR
Even though Form 16 is an important document to file your Income Tax Returns (ITR), there are other documents which are equally important. Mentioned below are the documents you will need:
- Aadhaar card: It is mandatory to provide your Aadhaar card details to file your income tax returns.
- Salary Slips: Salary slips contain the salary breakup and details of allowances like home rent allowance and travel allowance among others.
- Form 26AS: Form 26AS consists of your tax statement. It can be easily downloaded from the income tax e-filing website.
- Tax-saving proofs under section 80C: Proof of all tax-saving investments and expenditures like life insurance premium, employees’ provident fund, etc., made under Section 80C of the Income Tax Act of 1961.
- Tax-saving proofs under section 80D: Proof of tax-saving expenditures like health insurance premium made under the Section 80D of the Income Tax Act, 1961.
- Loan statements: Home loan statements from bank (If applicable).
- Capital gains: You have to report the capital gains accrued from mutual funds, sale of property, etc.
Filing ITR without Form 16
Follow these simple steps to file your income tax returns without Form 16:
- Use salary slips to compute income: Salary slips are the main documents that will help you compute your income. Therefore, it is imperative to collect your monthly payslips from your employer. While filing the tax returns, you are required to provide the following:
- Salary details
- Allowances not exempt
- Profit in lieu of salary
- Value of perquisites
- Deductions under section 16
The salary slips contain most of these details. But, in case your employer hasn’t provided details like the value of perquisites or profit in lieu of salary, you can contact the HR department or accounts department of your place of work and ask them for the same. Apart from these details, you can also access the information about allowances like house rent, travel, etc., tax deducted at source (TDS), etc., from your payslips. While filing ITR, such allowances are important as they are exempt from taxes.
- Form 26AS: Form 26AS contains a comprehensive break up of TDS deducted on your salary. It also consists of details of TDS deducted on your other sources of income as well. Therefore, you can use this document to make sure there are no inconsistencies in the TDS figures. Match the amount mentioned in your payslips, fixed deposits, and interest certificates with the details provided in form 26AS.
- Income from house property: If you own a house/property and are gaining profit from it as rent, you are required to report that income while filing tax returns. Additionally, if you are paying interest on any home loan, either self-owned or let out, you should disclose it under this category as it will make you eligible for deductions. If you are earning rental income, you can claim q flat 30% deduction and further deductions on tax paid to the municipal corporation on the said income.
- Income from capital gains: Contact your broker and ask for a summary statement if you have gained any profits from the sale of equities, mutual funds, or other such income. If you had any income from the sale of a property or house, use the purchase and sale deed to enter the accurate amount.
- Income from other sources: Income from bank deposits (savings, fixed deposit, etc.), interest on tax refund and many more fall under this category of income. To get the accurate value on the bank deposits refer to your bank passbook. Form 26AS can be used to get the precise value of the interests in tax refund.
- Claim deductions: Following are some of the sections under the Income Tax Act of India that allows taxpayers to claim deductions. You can claim all the applicable deductions and provide the proof documents of the income and expenditures.
- Section 80C: Under section 80C you can claim deductions on life insurance, equity-linked savings, fixed deposits, term deposits, recurring deposits, interest on the income tax refund, etc.
- Section 80D: Section 80D allows deductions on health insurance premium among other things.
- Total taxable income: Add the total income from all the sources mentioned above and subtract the total deductions from the amount. This will give you the total taxable income. After computing the taxable income, find out your income tax liability. If the liability is more than the amount mentioned in Form 26AS, pay the difference to the tax department.
After completing the above-mentioned steps, you can e-file your ITR. Make sure to verify the same within 120 days of filing.
Not having Form 16 might seem like a big hindrance to filing your income tax returns. However, by following the steps mentioned above you can still proceed to file your ITR as long as you have all the necessary documents ready.