Form 16 Vs ITR (Income Tax Return)

I have Form 16, Should I file ITR (Income Tax Return)?

Introduction

What is the Difference between Form 16 vs ITR (Income Tax Return), Do I need to file Income Tax return in spite of having only one Form 16 with me? Why filing of Income Tax Return is important? Let us discuss the details in this article.

Form 16 Vs Income Tax Return (ITR)| Benefits of Filing ITR

Many taxpayers submit their income tax return on the basis of the information reflected in the Form 16. While doing this, no other income and deductions apart from form 16 are reported to the Income Tax Department. This may cause a receipt of IT notice from the IT Department.

What is Form 16?

• Form 16 is a Certificate issued by employer showing TDS deducted and paid on the employee’s salary.
• Each employer issues Form 16 to his employees who are liable to TDS on salary. Therefore, if an employee switches his job from one to company to another, then he will receive form 16 from each of his employer, if his income is liable to tax.
• However, Form 16 is not a substitute to Income Tax Return. This is because Form 16 includes only that information which is disclosed to the employer.

What is Income Tax Return (ITR)?

• Income Tax Return is a reporting of :
  1. The income earned under all the heads
  2. Deductions claimed during the year
  3. Taxes paid during the year (TDS, Advance Tax, and Self-Assessment Tax)
• Income Tax Return is linked to PAN and hence, an individual can file only one Income Tax Return for one financial year. The Income Tax Return can be revised.
• Section 139(1) of Income Tax Act, 1961 provides the conditions for filing Income Tax Return. Accordingly, if Gross Total Income of an individual exceeds the basic exemption limit, then such individual shall file his income tax return, irrespective of the fact, that whether his TDS has been deducted or not.

I have Form 16, Should I file ITR (Income Tax Return)?

Throughout the year, I have only one job and therefore, obtained only one Form 16, do I need to file Income Tax Return?

• Yes. As stated earlier, Form 16 is just a TDS Certificate showing the details of TDS on Salary. It is not your final liability. Therefore, Form 16 is not a substitute to the Income Tax Return.
• One may have other income apart from the Income from salary, like
  • Rental Income
  • Interest on FD/SB/RD/Bonds, etc.
  • Capital Gain/Loss
  • Income from Business
• Individual may not have disclosed all the income to his Employer.
• Similarly, in case of deductions, it may happen that the tax saver investments are not properly disclosed to the employer, and hence, employer has deducted higher amount of TDS.
• Individual should offer all the income and should claim all the eligible deductions in his Income Tax Return. Therefore, even if you have only one Form 16, you can claim the TDS on salary only when you file your income tax return.

Other Reasons to File Income Tax Return

• It is always a good practice to file your Income Tax Return. It creates your database with Income Tax Department.
• Submission of ITR Acknowledgement is a must while applying for a loan.
• As stated earlier, Income Tax Act, 1961 has described the conditions for filing of income tax return.
• Income Tax Department levies heavy penalty for non-filing of Income Tax Return. (Ranging between ₹ 1,000 to ₹ 10,000) The detailed chart is given below :

Frequently Asked Questions (FAQs)