The ITR-1 form notified by the government for FY 2018-19 has simplified filling in salary details this year. The salary details required in ITR-1 is now just a copy-paste of the details available in the Form-16. This is a departure from the manner in which salary details were required to be filled in the previous year.
This year, ITR-1 has been synchronized with Form-16 to enable salaried taxpayers to easily fill in details. In the previous year, the format in which break-up of the salary was required to be filled in was not in sync with the Form-16 which made it difficult for taxpayers to fill in their details.
Form-16 is an important document for the salaried class. It is a TDS certificate issued by an employer, comprising information on the total amount of salary paid to you during a financial year and how much tax is deducted from your salary and deposited with the government against your PAN.
A salaried person files his return on the basis of Form 16 (TDS Certificate for salary) issued by the employer. Form 16 contains all information about the salary income of an assessee and tax deducted thereon. However, in respect of allowances, only the exempt part is reported in Form 16 and not the taxable part. ITR forms for the previous year, i.e., for FY 2017-18 required figures of taxable allowances, but Form 16 doesn’t contain such information. Due to this salaried persons were facing difficulty in reporting the taxable portion of allowances.
In last year’s ITR-1, taxpayers were required to provide information in five rows – Salary (excluding all allowances, perquisites and profit in lieu of salary), Allowances not exempt, the value of perquisites, Profits in lieu of salary, Deduction u/s 16. This information was not in sync with the information provided in the Form-16. The taxpayers were required to collect their monthly salary slips and Form-16 and ascertain the information required in the ITR-1.
In order to remove this difficulty and to bring the ITR forms in sync with Form 16, in the new ITR forms the exempt part of allowances are required to be reported instead of a taxable part. Hence, the salaried persons will not be required to use their salary slips for filing return of income and they can simply file it on the basis of information contained in Form 16.
While filing ITR-1, the deductions that an individual is claiming from salary income under section 16 of the Income Tax Act have to be clearly specified. In last year’s ITR-1 form, an individual was required to provide the aggregate amount of deduction without specifying the nature of deduction, i.e., whether the deduction is a standard deduction, entertainment allowance or professional tax.
The information regarding the same is easily available in Form-16. Standard deduction of Rs 40,000 will be a new detail inserted in Form-16 as it was re-introduced in Budget 2018. The deduction on entertainment allowance is applicable only to government employees for a maximum of Rs 5,000 or one-fifth of his salary excluding any allowance, benefit, or other perquisites, whichever is lesser.
If you have paid any professional tax or tax on employment, then such tax will be allowed as a deduction and will be mentioned in Part-B of your Form 16.