As the deadline to file income tax is approaching on July 31, it is vital to arrange all the key documents. One of such documents is form 16 that keeps a record of the payment of tax deducted at source (TDS) by your employer.
At the same time, tax payer can see the TDS entries in Form 26AS that reflects the deduction of TDS as per the income tax records .
Discrepancies are not uncommon
Discrepancies in details of a taxpayer in both forms (form 16 and 26AS) are not uncommon. For example, there could be an instance where the TDS amount in Form 16 and 26AS are different. In this case, the taxpayer can intimate the employer and get the mistake corrected.
In other words, it is common to have a difference between the tax which is outstanding and what is paid by your employer. So, it is indispensable to compare the TDS against the actual tax payable, and accordingly make extra payment or apply for the tax refund, as the case may be.
Let us understand what it means.
There could be a situation where your employer deducted a higher TDS and paid the tax on your behalf because you forgot to disclose all your investments or rental proofs that are allowed as deductions.
“It is incumbent upon a tax payer to compute the actual income tax and file the tax return accordingly. So, form 16 is not meant to be seen as the proof of outstanding tax,” said Deepak Aggarwal, a Delhi-based chartered accountant and financial expert.
And after you incorporate these deductions, your tax liability would be lower than what you paid for. This essentially makes you eligible for the tax refund.
On the other hand, you may have an income from another source that makes you liable to pay higher tax and your form 16 wouldn't include that. You can, therefore, add that income to your tax return and pay the outstanding tax.
Also, according to the latest tax rules, the interest on PF contributions is taxable if the amount is more than ₹2.5 lakh.
So, the taxpayers are supposed to make sure that they assess all the information while calculating the total tax payable and e-verify the return after filing the same.
It is also vital to mention here that during the budget speech for 2022-23, Finance Minister Nirmala Sitharaman introduced a provision of updated return.
With the introduction of this provision, tax payers can rectify mistakes and file updated return on payment of additional tax. This updated return can be filed within two years from the end of the relevant assessment year.