Filing ITR without Form-16: Implications and Navigating the Process

Introduction to Form-16 and 26AS

When you switch employers, it's essential to understand your obligation to submit necessary tax documents when filing your Income Tax Return (ITR). Form-16, provided by your previous employer, is a crucial piece of information that can simplify your tax filing process. Form-26AS, on the other hand, reflects the amount of tax deducted at source (TDS) from your income. Here's what you need to know about these documents and their relevance when you file your ITR.

What Happens if I Don't Submit Form-16?

While not submitting Form-16 won't necessarily trigger an intimation letter from the Income Tax Department, if your second employer has deducted TDS and it reflects in your Form-26AS, it is important to address any discrepancies. In case there is no TDS or it doesn't reflect in your Form-26AS, there is generally no immediate cause for concern.

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Preparing Your ITR without Form-16

If you don't have Form-16, you can still file your ITR by providing your income details manually. This process can be time-consuming, but it is possible. Alternatively, if you have received Form-16 from another employer, you can club your incomes and file your ITR accordingly. However, if the Income Tax department scrutinizes your ITR and finds discrepancies, it could lead to serious issues.

Consequences of Not Declaring All Income

Failure to declare all your income can result in serious consequences. If the department discovers that you have not declared all your income, they may issue a notice under Section 148 for escaped income. You may face a penalty for concealing income or providing inaccurate information about your income, which could be equivalent to the tax due on the escaped income. In extreme cases, the penalty can be up to 200% of the escaped tax.

The simplest solution to this problem is to file a revised return to correct any discrepancies before they cause further issues.

Handling Partial or Non-TDS Income

Depending on the salary accounting system adopted by your employer (typically March to February or April to March), you might receive salary for 2 or 3 months from your current employer. If this salary is less than 5 lakhs and your employer does not deduct tax (which is possible as 2/3 months' pay might be less than 5 lakhs with 50K standard deduction), you must be cautious.

If this 2/3 months' salary without TDS is reflected in your Form-26AS by July 2022, you are ‘trapped.' In this case, you should inform your current employer that you received a Form-16 from your previous employer to ensure full tax is deducted after giving credit for TDS and tax savings investments made with your old employer. If you do not do this, you will need to calculate the tax yourself, considering tax deductions and savings investments. If the amount is less than 10K, no problem. For higher amounts, you will have to pay interest under Section 234C for not paying the tax due in 4 installments by 15th March during FY 2021-2022. After this, you can file your ITR-1 with both forms together in July 2022.