With the Income Tax Return (ITR) filing season rapidly approaching, the critical nature of organizing critical documentation for tax filing cannot be overstated. While the list of tax-related documents required for your particular situation which differ, in the following sections, we will address two critical documents – Form 16 and Form 26AS – that can assist a salaried employee in filing his or her taxes with ease.

What documents do you need to file the taxes?

The critical documents needed to file your taxes correctly differ according to the type of income tax assessee you are. For instance, if you are a salaried employee who does not earn interest on fixed deposits or rental income from a second home, you will need only your Form 16 and Form 26 AS to file your taxes. If, on the other hand, you are self-employed and earn income from company profits/gains, you will require your annual profit and loss (P&L) statement, copies of challans for presumed tax charged, and Form 26AS to properly file your income tax return. The following are some critical documents that will assist you in correctly filing your ITR:

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  • Form 16
  • Form 26AS
  • Balance Sheet/P&L Statement
  • Monthly payslips/salary certificates
  • Interest Certificate for Fixed Deposits/Recurring Deposits
  • Copies of Challan 280
  • Capital Gains statement for shares/equity mutual funds
  • Capital Gains statement for debt investments
  • Records of various tax saving investment under various sections
  • Home loan certificate, etc.

What is included in Form 16?  

If you are a salaried employee, consider Form 16 the most significant form for filing your return. Two Parts A and B Type 16 are supplied by the employer to salaried employees. With respect to the AY 2021-22, several amendments have been made to the B of the Form 16 Part I. These are the critical aspects of this critical tax document:

Form 16 Part A

  • Employer’s name and address
  • Employee’s name and address
  • Deductor’s PAN and TAN (Tax Deduction and Collection Account Number)
  • Employee’s PAN and Reference Number
  • Employer’s TDS (Tax Deducted at Source) deposit details, including deposits made through direct transfer, book change, and challan

Form 16 Part B

The Form 16B for AY 2019–20 format notified by the CBDT will include the following data fields:

• Gross Salary in the event of a break-up (e.g. Salary, perquisites, profit from salary, total, etc.)

  • Allowances with a break-up
  • Disaggregation of deductions for entertainment allowances, etc.
  • Net gross profits (as computed from previous information)
  • Deductions allowed under relevant sections, such as 80C, 80D, 80E, 80G, and 80TTA.
  • Total sum deductible under Chapter VI-A
  • Gross Revenue
  • Total Income Tax (as per applicable income tax slab rate)
  • Education decline (approximately 3% )
  • Taxable (before Section 89 relief)
  • Explanation of relief pursuant to Section 89
  • Total Taxes Due

It will conform to the info in the ITR1 form, making it easier for salaried individuals to file their tax returns.

The Importance of Form 16 in e-Filing ITR

The primary purpoThe primary purpose of Form 16, particularly in its new form, is to facilitate access to the information needed to file an accurate ITR. In effect, Form 16 consolidates a variety of income tax-related data, including, but not limited to total income, available deductions under various segments of the Income Tax Act, relief under section 89, total tax liability, TDS details, and assessee net tax liability.

Although you may be able to finish your Income Tax e-filing using just your Salary Slips rather than Form 16, the procedure is time consuming and the likelihood of filing incorrectly is also high (unless you are a tax expert of course). Additionally, keep in mind that this form is only available to salaried individuals, and that Form 16 can be obtained only from their respective employers and cannot be downloaded.

Form 26AS – A Form to check TDS Deposits

One of the critical pieces of material included in Form 16 Part A is a clear account of the TDS deposits taken on behalf of the employee by the employer. Form 26 AS enables you to reconcile the TDS data contained in Form 16 with public documents. You can import Form 26AS for the relevant appraisal year from the TRACES (TDS Reconciliation Analysis and Correction Enabling System) website using your TRACES Login ID or your main bank’s Internet Banking Login credentials (if you have updated PAN with the bank). Alternatively, after signing into your account mostly on official Taxation e-Filing website, you can download the document.

How to use Form 26AS

There should be no discrepancy between the TDS data on your Form 26AS and your employer’s Form 16. Form 26AS also includes information about your employer’s federal tax account number. Form 26AS includes information on any and all that you’ve taken out of your salary or sales and deposited with the federal or state government tax authorities. Many TDS forms have main variables, such as this one: Form 26

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  • TDS on bank fixed deposit interest earned.
  • Details of advance tax, self-assessment tax and/or regular assessment tax deposited.
  • Details of income tax refund received by you during the fiscal.
  • TDS deducted by renter on rent in excess of Rs. 50,000 per month.
  • TCS (tax collected at source) information.
  • Records of mutual fund purchases in excess of Rs. 2 lakh (high-value transactions).
  • Details of high value property transactions recorded through AIR (Annual Information Return) mechanism.

These data, as captured in Form 26AS, can be critical in assisting an income tax assessee in filing their Income Tax Return quickly and accurately. Additionally, in the event of a discrepancy, the tax assessee can contact the relevant tax authorities and request resolution/redress.