Salaried individuals can file income tax returns (ITR) using the forms ITR-1 or ITR-2. ITR-1 applies to individual resident taxpayers with a total income of up to Rs 50 lakhs. Whereas, ITR-2 applies to other individual taxpayers who do not have income from business or profession.
ITR-1 can be used to report income from salary, one house property, income from other sources, and agricultural income of up to Rs.5,000. The form ITR-2 can be filed by individuals having income from more than one house property, capital gains, holding directorship in any company, or unlisted equity shares.
The salary TDS certificate in Form 16 has been revised to provide for more detailed information on the various tax-exempt allowances and deductions provided under the income tax law. Part B of Form 16 has been revised to provide for details of the various exemptions and deductions allowed under the income tax law.
A snapshot of the revised format:
Exemptions allowed
Deductions allowed
Filling up your ITR:
ITR-1
Taxpayers would have to fill in aggregate values of the broad components of salary:
- Salary
- Perquisites
- Profits in place of salary
Furthermore, a complete break-up would need to be provided of all allowances exempt under section 10. For example:
Similarly, each of the deductions allowed under chapter VI-A from section 80C to 80U must be reported separately. For example:
Life insurance premium, tuition fees for children, and PPF investment under section 80C
Medical insurance premium under section 80D
Donations under section 80D
ITR-2
Similar to the filing of ITR-1, taxpayers filing ITR-2 would also need to provide complete details of all the exempt allowances and deductions. In addition, ITR-2 requires taxpayers to submit complete break-up of various components of salary furnishing the specified amounts falling under salary, perquisites, and profits in lieu of salary. This information can be obtained from the annexure with Form 16 provided by an employer.
In ITR-2, taxpayers have to provide employer-wise details in case of salary received from more than one employer in a financial year. The revised format of Form 16 obtained from one or more employer would help to file details required in ITR-2.
Employees would no longer find it difficult to fill in the details required in ITR-1 and ITR-2. Employees can obtain all the details from Form 16 issued in the revised format to file their ITR.
If you use an online platform to file your ITR, these details can be automatically populated to your ITR, minimising your effort and helping you e-file accurately.
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The author is ClearTax CEO. Views expressed are his own