If you are ready to file your tax return, you must know the changes made in Part-B of Form 16.
What is form 16?
Form 16 is a certificate that is issued by an employer, and it has all the information that you need to prepare and file while your income tax return.
Employers must issue this form every year on or before 15th June, immediately after the tax is deducted. Form 16 has two components. These are part A and part B. if any case loses your form 16, you can request for another duplicate copy of that form from your employer.
Part B of Form 16
Part B of Form 16 is an agreement to Part A. If you need to change your job in one financial year, then it is up to you to decide if you would need Part B of the Form from both the employers or only from the last employer.
Some of the components of Part B that is included newly for the Financial Year 2019-20 are:
- Specific breakup amount of your salary
- Detailed breakup of excluded allowances under section 10
- Deductions allowed under the income tax act (under chapter VI A)
Part B of Form 16 Changes
For the FY 2019-20 Part B of Form 16 had got some changes, the changes are:
1. Reporting of allowances exempt under Section 10
Earlier, all the exempted allowances used to be clubbed under one heading and companies used to disclose those with the name of the allowance. The new format of Form 16 asks to put the benefits under particular provisions like gratuity, LTA, HRA, etc. They are to be disclosed under specific heading for them, and the balance is to be included in one residual head.
2. Standard Deduction
The standard deduction of ₹40,000 for salaried individuals was introduced last year for FY 2018-19. Now a separate row for the disclosure has been included in the revised version. The changes have also been made in ITR forms.
3. Income from the previous employer is to be disclosed in a separate row. Earlier, there was no separate disclosure for this and companies used to club this in a different head meant for all other incomes which the employee wishes to report, Sehgal added.
4. Reporting of deductions
Deductions like tuition fee, insurance premium, donations, NPS, etc. have been categorized separately under respective heads.
5. Earlier where the disclosure of different deductions was termed in a consolidated manner, ranging from 80CCD, 80C, 80G, 80E would now be added to be disclosed separately. These specific disclosures would provide ease to the tax authorities in understanding the various components of income of the taxpayer and thereby, facilitating the conduct of scrutiny more precisely.