10 Commonly Asked Questions (FAQs) on Salary and Income Tax
01. What is the No. 16 Form?
The employer deducts any amount of salary as income tax (Tax Deducted at Source or TDS) while paying salaries to you and deposits this amount to the government on your behalf. Your employer will send you the declaration of your wage, all other income and tax savings in a regular form after the end of the year and this form is known as Form No. 16.
02. What is the difference between I-T Return and Form No. 16?
An income tax return, also known as an I-T Return or ITR, is a form that a taxpayer must complete providing details about her sources of income, amounts of income received, and taxes paid in a given fiscal year. The I-T Return is to be sent to the government, while Form No. 16 is between you and your employer.
03. Can I measure my tax at a lower rate than the one shown on Form 16?
Yeah. Yes. If you skipped some tax savings in Form 16 (which sometimes happens), it is likely that your tax is measured in Form 16 rather than your actual liability. asthafandco.com incorporates all the saving tools available and offers a great deal of value when filing ITR to minimise taxes.
04. What happens if I don’t share my PAN with my boss or share the wrong PAN?
Your employer is responsible for your tax deduction and deposit. If you don’t share your PAN or share the wrong PAN, he can deduct tax from your salary at the maximum rate of 20% and pay it to the government.
05. Do I have to tell my boss about my other sources of income in addition to my salary?
In order to allow him to assess the correct tax deduction from your wages, you should notify your employer. You must pay advance tax or self-assessment tax on such income if you do not provide your employer with this information.
06. What is the difference between Part A and Part B of Form No. 16?
Type 16 meets the uniform format set out by the Internal Revenue Service. It is divided into two parts, Part A and Part B, according to that format. Part A provides basic details about the employer and employee, such as the employer’s address, TAN, and PAN, as well as the total amount of income paid to the employee. Part B provides complete information about various income sources, sums of income, claimed deductions, and taxes withheld thereon. The most critical aspect of Part B is the I-T Return filing.
07. Sections 17(1), 17(2) and 17(3) are listed in Form No. 16. What do they mean?
The pay package you receive can include various elements, such as allowances, donations to various funds, medical benefits, profit commission, etc. Section 17 of the Income Tax Act divides the various components of salary income into three sub-sections. 17(1), 17(2) and 17 are those 3 sub-sections (3). 17(1) requires basic salaries, DA, HRA, TA, LTA, etc. The 17(2) involves perquisite valuation sums such as rent-free accommodation, ESOPs, motor vehicles, etc. Wage gains such as commissions, fees or bonuses are included in the 17(3).
08. By ‘perquisites,’ what do you mean?
These mean ‘benefits’ of jobs in plain language. Generally, these are non-monetary aspects of the pay plan. There are numerous perks, such as free rent, use of a car, and club memberships, among others. These are priced for inclusion in the taxable salary in monetary terms. Such evaluations are carried out in compliance with the Income Tax Laws.
09. What does ‘income instead of wages’ mean?
For what he has done during the course of service, an employee often receives bonuses or commission or remuneration. In place of wages, this is known as Income. These are absolutely taxed.
10. What does Standard Deduction mean?
Per salaried taxpayer is entitled to a tax gain on salary income of 40,000/- under the law and regulations. As a result, if your salary revenue is $540,000, you just have to pay tax for the first 500,000. The ~40,000/- the sum is removed. The standard deduction is the word for this.