How to file ITR with multiple Form 16s: Here's a step-by-step guide

In view of the approaching deadline for filing your income tax return (ITR) for the financial year 2023-24 on July 31, 2024 (unless extended by the government), many of you may have recently received an email from your employers containing Form 16.

What is Form 16?

Form 16 is an essential document for filing ITR as it contains details of salary income, deductions, and exemptions. It is issued by employers and shows the tax deducted at source (TDS).

"According to Rule 31 of the Income-Tax (I-T) Rules, employers must annually issue Form 16 to employees by June 15 of the following financial year," says Suresh Surana, founder of RSM India.

 

Multiple Form 16s

If you switched jobs during the financial year, you would receive Form 16 from both your current and previous employers. So, how should you handle filing your ITR with two Form 16s? Let's break it down.

Reasons for multiple Form 16s

1. You switched jobs within the financial year.

2. You worked for more than one employer simultaneously.

Possible complications?

"Tax liability can arise at the time of ITR filing because each employer considers exemptions and deductions in their calculations, leading to claims being made twice in a year," explains Sudhir Kaushik, Co-founder and CEO of Taxspanner. "Interest on non-payment of advance tax under sections 234A, 234B, and 234C also adds to the tax liability," he adds.

Step-by-step guide to filing ITR with multiple Form 16s

1. Collect Form 16 from all employers: Check the TDS amounts and sum up the total gross salary.

2. Download Form 26AS and AIS report: Match the salary and TDS amounts from Form 16. Any discrepancies should be reported to the employer immediately.

3. Calculate total income: Include salary income and other sources like interest and dividend income.

4. Claim deductions: Include any investments, donations, etc., made under sections 80C to 80U to determine the total taxable income.

5. Compute total tax liability: This may include interest liability under sections 234A, 234B, and 234C.

6. Compute net tax liability: After considering TDS, TCS, and advance tax (if any). Pay any shortfall in tax liability or claim a refund for excess taxes paid.

7. File ITR: After paying the net tax liability, including interest, file your ITR.

How to save tax and interest liability under Sections 234A, 234B, 234C?

Kaushik suggests using Form 12B to inform your new employer about your previous salary so they can consider income from another employer when deducting TDS. Interest can be saved by making advance tax payments on June 15, September 15, December 15, and March 15 of the respective financial year.

Key terms to understand

Section 234A: Delay in filing the return of income.

Section 234B: Non-payment or short payment of advance tax.

Section 234C: Non-payment or short payment of individual instalments of advance tax.

Form 26AS

Form 26AS provides details of any amount deducted as TDS or TCS from various sources of income of a taxpayer. It also reflects details of advance tax/self-assessment tax paid and high-value transactions entered into by the taxpayer.

AIS Report

The AIS report gives information about an individual's income during any given financial year from various sources like interest, dividends, rental income, GST turnover, securities, mutual fund transactions, foreign remittance details, and high-value transactions such as real estate.

TDS and TCS

TDS is the tax deducted on payments made by a company to an individual if the amount exceeds a certain limit. TCS is the tax collected by sellers when selling something to buyers.

Remember, filing your ITR accurately and on time can save you from unnecessary penalties and interest liabilities. If you have multiple Form 16s, ensure you follow the steps diligently to avoid any complications.