The Amount of Salary Disclosed in Income Details/Part BTI is Less Than 90% of Salary Reported in Schedule TDS 1: If one is a salaried person, they must have received their Form 16 by now. This document is issued by employers every year. It is essential to understand the details that are given in Form 16. Understanding the content of Form-16 will help you file your I-T returns quickly.
Form 26AS
- Includes information about the tax deducted on the income by deductors
- Details about tax collected by the collectors
- Advanced tax paid by the taxpayer
- The self-assessment tax payments
- The regular assessment tax that is deposited by the taxpayers (PAN holders)
- Details of the refund received from an individual during the financial year
- Detail on the High-value Transactions in respect of shares, mutual funds etc.
Parts Of 26AS
- Part A: Details on the Tax Deducted at Source
- Part A1: Details on the Tax Deducted at Source for Form 15G/Form 15H
- Part A2: Details on the Tax Deducted at Source on Sale of Immovable Property u/s194(IA) (For the seller of Property)
- Part B: Details on the Tax Collected at Source
- Part C: Details on the Tax Paid (Apart from TDS or TCS)
- Part D: Details of Paid Refund
- Part E: Details of AIR Transaction
- Part F: Details on the Tax Deducted on sale of immovable property u/s194IA (For Buyer of property)
- Part G: TDS Defaults* (processing of defaults)
Income Picked In Prefill From Form 26AS
When one uses the prefill option, the income picked up, Total Amount Credited, and Total tax deducted from the Form 26AS. PART A – Details on the Tax Deducted at Source show the TDS deducted from your salary/pension income and TDS deducted by banks on your interest income.
The TDS deducted by each source will be shown in a separate table. Clicking on the + sign before the Name of the deductor will showcase all the entries.
- Entries are in reverse chronological order, which means entries with a later date will appear first. So, if you have an entry for dates 31-Jul-2014, 31-Aug-2014, 30-Sep-2014, then they will appear as 30-Sep-2014 31-Aug-2014 31-Jul-2014.
- Details of deductor match one’s Form 16, Form 16A.
- All entries required for a deductor to match with the entries in Form 16/16A. Check each of the entries for Section Under Which Deduction is made (192 for Salary, 193 for interest on Fixed Deposit from the bank), Date at which Transaction is completed, Status of Booking.
- The booking status will become F or FINAL, implying that the payment details of the TDS / TCS that have been deposited in the bank by the deductors have matched with the payment details that have been mentioned in the TDS / TCS statement that the deductors have filed.
- If the employer’s tax deducted is not reflected in Form 26AS, then the employer should be approached to ensure filing of TDS statement with correct PAN.
Form 16 Part B
Part B of Form 16 is an enclosure to Part A. Part B must be prepared by the employer for its employees. It contains details of the breakup of salary and deductions approved under Chapter VI-A.
If you change your job in one financial year, you should take Form 16 from both employers. Some of the parts of Part B notified newly are:
- Detailed breakup of one’s salary
- Detailed breakup on exempted allowances under Section 10
- Deductions permitted under the Income Tax Act (under chapter VIA):
The list of deductions mentioned are as below:
- Deduction due to life insurance premium paid, contribution to PPF, etc., under the Section 80C
- Deduction due to contribution to pension funds under Section 80CCC
- Deduction for employee’s contribution to a pension scheme under Section 80CCD(1)
- Deduction for the taxpayer’s self-contribution to any notified pension scheme under Section 80CCD(1B)
- Deduction for employer’s contribution to a pension scheme under the Section 80CCD(2)
- Deduction due to health insurance premium paid under the Section 80D
- Deduction due to interest paid on loan taken for higher education under Section 80E
- Deduction for donations made under Section 80G
- Deduction for interest income on savings accounts under the Section 80TTA
Income Report In Form 16 Part B
It is recommended to fill in the Salary as mentioned in Pt 6 Income under the Head Salary. This salary has arrived from Gross Salary(Pt 1 in Form 16). Employers deduce allowance exempt under Section 10 such as Transport allowance, HRA, and deductions usually Entertainment allowance and Tax on employment or Professional tax.
The income and TDS submitted to the government are reported in Form 26AS and given to us as Part A of Form 16. If one prefills from Form 26AS, then if the salary they entered using pt 6 in Form 16 is less than 90% of the salary reported in TDS1 that gets prefilled, then one will receive the error message.
For example, if an individual’s salary from Form 16 is 678688, however Gross Salary total (pt 1 (d) in the Form 16) is 764320. Since 6,78,688/7,64,320 (Net Salary/Gross Salary) is 88.79%, these individuals will receive the message that “The amount of salary disclosed in Income details/Part BTI is lesser than 90% of Salary reported in Schedule TDS1”.
In Schedule TDS1, one can change the Income under the Salary(3). If one changes it to salary in Income details, they don’t get the message.
Validation Rules and Warning
Several companies have been making Income tax filing software. However, there are many errors and insufficient data quality in this software, due to which returns are either being rejected or wrongly generated.
Besides Excel, the Java utility of the Income-tax department also releases the rules, known as Validation rules, which one needs for ensuring in writing software for Income tax e filing.
The communication regarding Validation rules is given below.
The Income Tax Department offers free return preparation software. This software are available on the downloads page and facility for online ITR submission for ITR 1 & ITR 4S, fully compliant with the data quality requirements.
However, there are several commercially available software or websites which offer return preparation facilities as well. For improving the data quality received in ITRs prepared by such commercially available software, many types of validation rules are being established in the e-Filing portal.
The data that is being uploaded can be validated to a more significant extent. Taxpayers are being advised to review the same for ensuring that the software which is used is compliant with these requirements for avoiding rejection of return due to insufficient data quality or mistakes in the return.
Software providers are strictly advised to stick to these rules in order to avoid inconvenience to the taxpayers who may be using their software.
What To Do When An Error Arises?
When the amount showcased in the income chargeable – under the head salaries category – is lesser than 90% of the individual’s Salary reported in the TDS 1, please ensure to fill details in Others in Exempt Income – an error that many salaried taxpayers face while filing their income tax returns.
Why the Error?
This error occurs when the gross salary as reported by the employer in Form 26AS is higher than the one quoted by the individual from Form 16 while filing their tax return.
Your Form 26AS numbers are the same as what has been quoted in Form 16 – Part A by your employer. When filing the return online, the ITR Form will automatically pick up data from Form 26AS. You can check for the same in the Tax Details tab >> Sch TDS 1.
The error occurs when Net Salary is less than 90% of the gross salary & fails to report the tax-free allowances in the exempted income section of ITR.
Like in this case, the Gross Salary is Rs 15,86,610, and the net salary is Rs 13,12,938. The percentage of Net salary to Gross salary is 83%. Since this is less than the stated 90%, you will be getting the error.
How to Correct The Error?
The error is easy to correct. All that needs to be done is to report your tax-free allowances in the exempt income section. This can be done by the following steps for ITR 1.
Go to the Taxes Paid & Verification tab >> Exempt Income (For reporting the purposes) >> fill (iv) i.e., others.