ITR filing: All you need to know about changes in Form 16 effective this year
Dig into additional details to file returns for your income earned in FY 2018-19
The last date to file your income tax returns for the year is July 31, 2019. If you haven’t already started computing your tax liabilities, it’s time to start now. Although technology has made it easier for us to file our returns online, the details required while filing returns this year ensure that you would have to dedicate a lot more time to this than earlier.
Taxpayers under the age of 80 years would have to bid adieu to paper or physical filing of income tax returns in the year 2019-20. If you have made any donation to charitable institutions, you will have to disclose the amount of such donations made in cash and other modes separately.
Also, 'Pensioners' is a newly introduced category in the type of employment apart from Government, PSU or Others. But these minor alterations aren’t the only changes made to income tax returns.
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Form changes
If you are of the view that you would easily pick the return form like last year and file the tax return then think again. Directors on boards of any company and a person, who has investments in unlisted companies would have to opt for ITR 2.
“The income tax department is seeking more disclosures from people to plug the tax evasion loopholes and hence the changes,” says Sudhir Kaushik, founder of taxspanner.com.
So, in ITR 2, those directors and owners of shares in unlisted companies need to file additional details of the company name, the PAN and Director Identification Number.
Salary break-up
While filing the income details from your Form 16, merely filling in the gross salary and deductions wouldn’t help. You would have to fill up more columns this year. Specifics of the salary, including perquisites, allowances that are exempt too have to be mentioned.
“The exemption fields have been specifically mentioned to ensure that the employees fill in the relevant information and stop designing a salary structure of their own. The reason for standardisation of Form 16 has been to ensure the right exemptions are being claimed so that the same can be matched with the returns filed by employers,” states Kaushik.
If your Form 16 doesn’t mention the break-up, do request the accounts department for Form 16 in the new format. “This year, Form 16 itself has been amended. The employers will need to give information in the new Form 16. From that Form 16, the data will get auto-populated into the ITR of salaried people. This is a new experiment that the Central Processing Centre (CPC) is trying this time,” says Ameet Patel, partner at Manohar Chowdhry & Associates.
Those who switched jobs during a financial year would find it difficult to hide the income from both employers as the new Form 16 asks for details of both employment (old and new).
“So far, the disclosure of income from the previous employer was optional. Thus, many would claim ignorance and not declare income from the previous employer when they switched jobs. Now they can’t avoid the penalty if they fail to disclose the income from both the employers. The better part is that compliance has become easy, for those who had to calculate the income from two employers due to job switch and the relevant tax fields and deductions,” exemplifies Kaushik.
Interest rate segregation
One is required to give break up of different interest rate – savings bank, fixed deposit or income tax refund interest. This is essential due to the exemption available on savings bank interest up to Rs 10,000 and Rs 50,000 exemption available to senior citizens.
Kaushik of taxspanner.com says, “Hitherto, people would hide the interest income by maintaining fixed deposits in different branches. That has been weeded out now. Interest income can be traced through PAN. Also, taxpayers should make sure that they follow and verify the details mentioned in Form 26 AS like never before. Corrections should be taken up with the bank in case of any mismatch.”
Once again, this is an attempt to curb malpractices in terms of claiming deductions - for example claiming deduction u/s 80TTA of Rs 10,000 even though bank interest did not add up to that figure. Probably, the interest on the income-tax refund will be cross verified with the figure appearing in Form 26AS.
Property and income
Those who are owners of immovable property need to mention the details that would be cross-checked and verified through other sources.
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