Filing Income Tax Returns (ITR) is a crucial financial responsibility that every eligible individual must fulfill. It is mandatory for individuals whose income exceeds the basic exemption limit to file ITR regularly and correctly. The primary reason for filing ITR is compliance with the law. Failure to file ITR can result in penalties and legal consequences.
Another important reason for filing ITR is to claim tax refunds. If an individual has paid more tax than their actual liability, they can claim a refund by filing ITR. Filing ITR can also help establish financial credibility.
Form 16 is an important document for salaried employees in India because it serves as a proof of income earned and tax deducted at source (TDS) during the financial year. Form 16 is issued by the employer to their employees usually on or before 15th June of the following financial year, and it contains details such as the employee’s name and PAN (Permanent Account Number), employer’s name and PAN, income earned, tax deducted, and other relevant details.
Form 16 is also essential for filing ITR as it contains all the necessary details required to calculate the taxable income and the amount of tax payable. Without Form 16, it may be difficult for salaried employees to file their ITRs accurately and efficiently, which can result in penalties or legal issues. However, ITR can be filed without Form 16 provided all details are correctly filed by the taxpayers.
Moreover, Form 16 is accepted as valid proof of income by banks and financial institutions when employees apply for loans or credit cards. Therefore, it is crucial for salaried employees to obtain Form 16 from their employers every year and keep it safe for future reference.
Individuals who do not have Form 16 may obtain tax from Form 26AS.
Form 26AS is a consolidated tax statement that contains details of all the taxes that are deposited with the government on behalf of a taxpayer. It is a statement that reflects the tax credit in a taxpayer’s account.
The form includes the following information:
- Details of TDS (Tax Deducted at Source) on salary, interest income, rent, and other sources.
- Details of TCS (Tax Collected at Source) if any.
- Details of Advance Tax/Self-Assessment Tax/Regular Assessment Tax paid by the taxpayer.
- Details of high-value transactions like property purchases, investments, etc. if any.
- Details of tax refunds received in the financial year.
Filing ITR is a necessary financial responsibility that individuals should fulfill to stay compliant with the law, establish financial credibility, and avoid penalties and interest.
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