Form 16 is one of the most essential documents required by taxpayers to file an income tax return (ITR) form every financial year. Form 16 is issued by the employer if tax is deducted by them on behalf of the employee’s salary. Form 16 contains details of various TDS/TCS transactions. It is mandatory to issue Form 16 to the taxpayers.
The income tax department sets a deadline for every financial year by when all companies in India have to issue form 16 to all its employees or former employees.
Why File Multiple Forms 16?
As mentioned above, form 16 is issued by the employer for your earnings in one financial year. However, if you switch jobs and work under multiple employers during the same financial year, you will end up filing income tax returns with more than one form 16.
Consider this: Ravi worked for ABCD Inc. from April 1 to July 31, 2020, and then switched to XYZ Pvt. Ltd., where he continues to work for the rest of the financial year until March 31, 2021.
Ravi will be required to use multiple Form 16 given by two employers to file the returns for the fiscal year 2020-2021.
Does Having Multiple Form 16 Change the ITR filing process?
Yes and no. Yes because multiple form 16 are required to collate your income earned and TDS deducted from multiple sources/employers. Apart from this step, nothing else changes materially for taxpayers. The process remains the same.
How To File Taxes With Multiple Form 16?
If you have switched jobs within one financial year, using multiple form 16s from all those employers is essential. Every employer will issue a Form 16 which has all the details such as gross total income from salary, tax deducted at source (TDS), and 80C deductions.
Step 1: Pick the correct ITR form that applies to you. Most of us file the ITR 1 form which is meant for individual taxpayers.
Step 2: You will then provide information such as your full name, address, and more.
Step 3: Next, you need to add the income earned during a financial year and enter it in your ITR form. This is where multiple form 16s will come into the picture. Here you will have to manually add the income from both the companies you worked for. Many tax filing websites allow you to upload multiple form 16s that add your income and collates other details in the multiple form 16s for you automatically.
Step 4: Over the next few steps, you will be adding details about tax deducted at source (TDS) from your salary and other deductions like House Rent Allowance travel allowance, etc. Any investments under section 80C or any other sections of 80D, 80G, etc. can be used to reduce your taxable income.
Step 5: The last step will calculate the tax payable by you if any. After paying the tax, employees can file an income tax return.
You can use Form 12B to inform your new employer about the previous earnings and investments. Form 12B can help the new employer during tax deductions and also in consolidating the salaries of both employers.
What To Do In Case the Previous Employer did Not Issue You a Form 16?
This situation may arise if you haven’t taken Form 16 from the previous employer or in case the previous company became bankrupt. In such a case, you can use the below steps to file the ITR.
- Do the salary breakup and tax deductions using the payslips of the previous employer.
- Now, consolidate the total income and deduct the exemptions like rent, travel allowance, etc.
- If you have invested under sections 80C to 80U, claim those deductions.
- Finally, calculate the tax liability and deduct the TDS mentioned by both the employers in their respective Form 16.
- If there is still any tax due, you have to pay it. Use Form 26AS to cross-check the deductions.
How To File ITR?
- Collect all the required documents like salary slips, Form 16, investment statements, etc.
- Cross-check your tax deductions with Form 26AS. If found any mismatches, rectify them.
- Calculate the total income for that particular financial year.
- After calculating the total income, compute the tax liability according to your income tax slab.
- Now calculate the final payable tax.
- Once all the taxes are paid, you can file your ITR to get your refunds.
- The last step is to verify the ITR. You can do this electronically. You will receive an acknowledgment.
- After ITR verification, the income tax department processes your refunds.
- Use Form 12B to inform the new employer about the previous salary. It makes your life easy while filing multiple forms 16.
- Combine the value under “salary under section 17(1)” to find the gross salary.
- In case of no Form 16, the previous employer breaks down the salary slip to arrive at the final taxable income.
Is it possible to file ITR with Form 16 from any employer?
How to inform the new employer about the past salaries?
Use Form 12B
If you have requested Form 16 from one or more employers or if you have calculated your tax obligation using the above, prepare to file your return before the deadline. Taxes can be very complex and challenging to understand at times. Leaving it for the last moment may lead to errors due to hurried tax filing.