ITR Filing 2025: This year's Form 16 will be more detailed - don't miss any exemption this time

The new financial year began on April 1, prompting taxpayers across the country to prepare for filing their Income Tax Returns (ITR) for the previous year. The Income Tax Department has already released the tax filing forms for the financial year 2024–25 (Assessment Year 2025–26). With the July 31, 2025, deadline approaching, it is important for taxpayers to gather all necessary documents to ensure a smooth and error-free ITR filing process.

For salaried taxpayers, Form 16 is a crucial document issued by employers. It contains key information regarding an employee's salary and the tax deducted at source (TDS) during the financial year. Understanding its components is essential for both employers and employees to ensure accurate ITR filing and compliance with tax regulations.

What is Form 16?

Form 16 substantiates that an employer has deducted TDS from an employee’s salary and remitted it to the Income Tax Department. It outlines the total income earned and taxes paid, making it essential during ITR filing.

Beyond tax returns, Form 16 also plays a significant role in financial documentation. It is commonly required by banks and financial institutions as proof of income during loan applications. Additionally, individuals who have overpaid TDS can use it to claim refunds, making it a vital document for accurate tax compliance.

What changes will be incorporated this year?

Salaried employees should note that changes have been made to the format of Form 16, especially in how tax deductions and perquisites are reported. These updates aim to enhance clarity regarding exemptions, deductions, and taxable components of salary.

The revised Form 16 will provide more comprehensive details. Unlike earlier versions, which only provided basic information, the new format clearly identifies tax-exempt allowances, the extent of deductions, and taxable benefits. This greater transparency will reduce confusion and simplify the ITR filing process.

As the new tax season begins, being aware of these updates and ensuring possession of all necessary documents, particularly Form 16, will make the filing process more accurate and hassle-free.

Anita Basrur, Partner at Sudit K. Parekh & Co. LLP, said: "The updated / current format of Form 16 appears to be more detailed and categorically brings out the salary components that are tax-exempt, the various deductions provided against the salary, taxable allowances, etc."

Key updates to Form 16:
a. Clear segregation of tax components
b. Mandatory disclosure of the New Tax Regime
c. Consolidated details for employees with multiple employers
d. Uniform standardization across all employers

Basrur added: "The purpose of bringing about this change is to make it easier for the taxpayer to understand and also to bring about transparency. This detailed break-up will enable employee taxpayers to clearly understand their salary structure and deductions, reduce filing errors, and simplify the reconciliation of income and tax deductions."

When can you expect to receive Form 16 this year?

Form 16 is a certificate issued to salaried employees by their employer that provides a detailed summary of salary earned and Tax deducted thereon and deposited to the Income tax authorities.

The employer is required to file Form 24Q (TDS return for salaries) by 31st May 2025. The 24Q for Q4 provides complete details of salary, perquisites and TDS. Once the 24Q gets processed within 15 days of filing. Post that the employer can download the Form 16s. thus the outer date for issuance of Form 16 is 15th June If any employer delays or fails to issue Form 16 by the specified date, he is liable to pay a penalty of Rs.100 per day until the default continues.

Note: If an employee changed his/ her jobs during the year, he/she must collect Form 16 from each employer he/she worked for.

When will companies issue Form 16 to their employees?

As stated above, employers are required to issue Form 16 to their salaried employees on or before the 15th of June of the assessment year for which the income tax return is being filed. Thus, for the FY 2024-25 (AY 2025-26) Form 16 should be issued by 15th June 2025.