ITR Filing FY25: Know Key Changes in Form 16 Including Higher Standard Deduction and NPS Benefits

By June 15, 2025, salaried individuals will start receiving their Form 16 for the financial year 2024-25. This key document issued by employers outlines the salary paid and the tax deducted at source. For the assessment year 2025-26, Form 16 will reflect several updates introduced by the July 2024 Budget, especially relevant to those under the new tax regime.

These changes aim to bring greater transparency and accuracy to tax disclosures, deductions, and benefits for employees.

Higher Standard Deduction under the New Tax Regime

One of the major revisions in Form 16 is the increased standard deduction for employees who have chosen the new tax regime. From FY 2024-25 onwards (assessment year 2025-26), the deduction has risen from ₹50,000 to ₹75,000.

This change will be clearly visible in the salary details section of Form 16. The increased deduction helps lower the taxable income and offers greater relief to individuals who do not claim various exemptions under the old regime.

Increased Deduction on Employer Contribution to NPS

Another significant change in Form 16 is the revised deduction on employer contributions to the National Pension System (NPS). Under Section 80CCD (2), the allowable deduction has increased to 14% of the basic salary for all employees, matching the earlier benefit given only to government staff.

This change applies only to those under the new tax regime and will be reflected in the deduction summary section of Form 16. The update enhances retirement savings benefits and reduces taxable income for eligible employees.

Reporting of Taxes Deducted on Other Incomes

Form 16 for FY 2024-25 will also display taxes deducted on other sources of income. If you have submitted Form 12BBA to your employer declaring earnings from other heads, such as interest income or dividend income, then the tax deducted on such income will be included in your Form 16.

Additionally, any Tax Collected at Source (TCS) on specified high-value expenditures such as overseas travel or luxury items will also be shown. This change stems from the Budget 2024 amendment, aiming to improve transparency and ease of filing for taxpayers with multiple income sources.

Read More: ITR Filing FY25: Claiming Deductions Under Old Tax Regime? More Proof Needed for HRA, 80C & 24b! 

Reflection of All New Regime Adjustments in Form 16

If you have opted for the new tax regime for the financial year, your Form 16 will present a comprehensive view that includes:

• A higher standard deduction of ₹75,000
   
• A greater NPS deduction on employer contributions
   
• Tax deducted on other declared incomes and applicable TCS

These updates are intended to simplify your ITR filing and ensure that all income and deductions are accounted for under one document.

Conclusion

For FY 2024-25, Form 16 brings in 3 major updates that directly benefit taxpayers using the new tax regime. With an increased standard deduction, enhanced NPS benefits, and visibility into taxes on other incomes, the document becomes more comprehensive and accurate. Employees are advised to review their Form 16 carefully to ensure all updated components are reflected correctly before proceeding with their ITR filing for AY 2025 26.

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