Form 16 is an important document while filing Income Tax Return, as it the document that contains income details of the taxpayer. Form-16 helps the taxpayer to understand the bifurcation of income under various heads, according to which the taxpayer becomes aware of his/her tax liability and how many deductions he/she can claim on their income under various heads.
How to use Form 16?
Form 16 is a document that contains all the details of the income under various heads of income, at the time of filing Income Tax Return. In case you want to know your income details and have Form 16 with you, you will have to refer to the Part B of the Form. In Part B of Form 16, you will find salary, a value of perquisites, profits in lieu of salary, allowance etc. If you combine all these together they form your gross salary and indicate your income. Form 16 is a proof of tax deducted at source, or TDS, that your employer deducts from your salary at the end of the year. Your employer cuts TDS from your salary every month and submits the amount to the government. Form-16 serves as a certificate for income tax paid to the Government of India by the taxpayer.
Deductions that you can claim
A taxpayer is eligible to claim those deductions while filing Income Tax Return, that reflects in Form-16. An individual can claim deductions under section 80C if you invest in instruments such as equity linked-savings scheme mutual funds, public provident fund and life insurance premium. You can also claim a standard deduction of Rs.40,000 as per the union budget 2018.
How Form 16 is used in ITR?
You must keep your Form-16 by your side while filing Income Tax Return, if you are planning to file your Income Tax Return for the Financial Year 2017-18, then you will have to provide you salary break-up in your ITR Form. You can easily get the break-up of your Salary from your Form 16.