What would life be without Form 16?
A single document that is packed with all the necessary information relating to your income and taxes levied on them, apart from the various deductions that helped you individually save taxes is the Form 16. Let us know the worth of this document, which each employee needs to hand out to an employee by April 30 at the end of each financial year.
We all dread the thought of taxes and get goose bumps as the tax return filing date nears. But there is one document that makes life easier for you, especially when you are filing tax returns on your own – the Form 16.
To gauge the importance of Form 16, let us use the mom’s formula. Did that perplex you into thinking which formula did a mom invent? Well, mothers always lament that the family will realize her worth when she isn’t around. So, we tried to build a situation where there is no Form 16, everything else remaining constant.
Here are the situations in which you will miss the presence of a Form 16:
A. To know your total salary received during a financial yearyou would have to either check your bank account statement or add up the figure or refer the salary slip for each month. Since heavy taxes are deducted during the last three months of the financial year, referring just one month’s pay slip would never reveal the actual salary picture to you.
B. Even if you have religiously followed a practice of noting down the salary amount received each month as soon as you receive it, the salary structure at various organizations ensures that select sum is handed over as allowances, which are exempt from income tax. Segregating such income, which is exempt, is an exercise for which many employees aren’t adept. In the Part B of Form 16, such allowances are deducted and the final amount, which should be mentioned in “Income chargeable under the head salaries” is mentioned.
C. Again the income mentioned as salary is not the amount you should be paying tax on. There are deductions under Section 80C, 80CCC, 80CCD, etc. which need to be accounted for. The math involved would consume at least a day for non-financially savvy individuals, if not for Form 16.
D. Indicating the tax deducted during the year in your tax returns would never be a breeze again. You would have to make several rounds of your employer’s accounts department to know the various amount of tax deducted during the four quarters and the specific dates on which they were deposited in the government account, apart from the Challan number and the BSR Code of the bank branch in which they were deposited. These details are succinctly listed in the Part A of the Form 16.
E. There would be no way of checking the accuracy of the Permanent Account Number (PAN) against which the salary has been credited and the taxes deducted. You would also need to reach out to your employer to know their PAN and TAN, which are otherwise prominently placed on a Form 16. If you are one of those who are used to noting down important things on a piece of paper and misplacing it, then your accounts department lady would never spare you a remark or two.
F. Ensuring that the employer and you as an employee are on the same page with respect to name, address, your designation, employee code and the salary amount would never be possible without the Form 16.
G. Instead of offering a four -page document for loan and visa applications, you would have to bundle in bank account statement for all the years required, multiple salary slips, tax-payment challans and proof of employment.