Revised Form 16 and it’s impact!

Form 16 is a certificate issued by the employer showing the income received from the employer
and TDS deducted on such income and deposited with the Authorities during a financial year
(‘FY’). It is issued on annual basis on or before 15 th June of the year immediately following the
FY to which the TDS pertains. Form 16 is an important document evidencing the taxes already
deducted by the employer and plays a major role for filing of the income tax returns.
Recently the CBDT has notified some changes in the format of Form 16.The revised Format of
Form 16 is applicable from 12 th May, 2019. Employers will use this new format to issue Form 16
for salary earned in FY 2018 – 2019.
As per the notification, PART B of Form 16 shall be more detailed in order to allow the tax
department breakups of tax exemptions claimed by an individual and spot differences if any
between FORM 16 and the return of income filed by the individual.
Broadly, 5 changes have been made in the Form 16. A more detailed break up of information is
required to be disclosed as follows:
1. Salary received from previous employer/s is now required to be disclosed.
2. Further break-up of the allowances claimed such as Travel Concession, Death-cum
Retirement gratuity, Commuted value of Pension, Cash equivalent of leave salary
encashment, HRA and any other tax-exempts.
3. Standard Deduction of INR 40,000/- was introduced effective FY 2018-2019. A new line
item has been added in Form 16.
4. Detailed break-up of the deduction under s. 80C to 80U.
5. Income/ loss from House Property and income from other sources reported by the
employee for TDS. Total amount of other income reported by the employee.
Impact : The new Form 16 will enable individuals file their tax returns easily only by looking at
Form 16. Since the Form 16 will now be detailed, it will help the tax department identify any
differences in the Form 16 and the return of income filed by the individual. This step is
expected to reduce the possibility of tax leakages. The individuals will also have to ensure
complete documentation in support of the claims made by them.