Wait for Form 16 — Everything Starts Here
Every ITR filing season starts with one thing — waiting for Form 16. And with this the question arises, How to file ITR ?
Form 16 is the document your employer issues after the financial year ends. It contains everything the Income Tax Department needs to know about your salary income — your gross salary, all allowances, perquisites, deductions, TDS deducted month by month, and your final tax liability for the year. Without it, you are guessing. With it, you have everything.
In my organisation, Form 16 typically arrives in June. The deadline for employers to issue it is June 15 every year. Don’t file before it arrives — no matter how eager you are to get the refund processed quickly.
When mine arrives, I don’t go straight to filing. I go through every line of Form 16 first. I recalculate the figures manually — gross salary, perquisites, deductions, tax liability. I verify that what my employer has submitted to the IT Department matches what I know my salary actually looks like. Errors in Form 16 do happen. Catching them before filing is infinitely easier than correcting them after.
Once I’m satisfied Form 16 is correct, I run two cross checks. First, Form 26AS — the TDS credit statement available on the IT portal. This shows every rupee of TDS deducted against your PAN from every source. Your employer’s TDS, bank TDS on fixed deposits, any other deductions — all listed here. I match the TDS figures in my Form 16 against Form 26AS line by line. Mismatches here are more common than people think. I have personally helped several colleagues catch errors where TDS deducted from their salary was not correctly deposited against their PAN by the employer. That error, if uncaught, means you pay tax that was already deducted — and then fight for a refund.
Second cross check is the AIS — Annual Information Statement. AIS shows everything the IT Department knows about you from all sources — salary, bank interest, mutual fund transactions, property purchases. If your ITR doesn’t match AIS, you get a notice. Check it before filing, not after.
Form 16, Form 26AS, and AIS — all three matching cleanly. That’s when you’re ready to file.
Which ITR Form Should You File
Choosing the wrong ITR form is the fastest way to get a defective return notice from the IT Department. Get this right before you type a single number.
There are four forms relevant to PSU employees.
ITR 1 — Sahaj: Salary income only. Total income below ₹50 lakh. One or two house properties. Bank interest income. From FY 2024-25 onwards, LTCG up to ₹1.25 lakh from equity mutual funds can also be reported here. Simplest form. Deadline: July 31, 2026.
ITR 2: Salary plus capital gains — MF redemptions, property sale, stock trading, crypto gains. More than one house property. Income above ₹50 lakh. If you sold even one unit of a mutual fund or any cryptocurrency during the year, ITR 2 is your form. Deadline: July 31, 2026.
ITR 3: Salary plus business income. This is the form for PSU employees who traded in F&O — Futures and Options. The IT Department treats F&O trading as non-speculative business income, not capital gains. Many employees don’t know this and file ITR 2 instead. That is a defective return. If you did any options trading during the year, ITR 3 is mandatory. Deadline: August 31, 2026.
ITR 4 — Sugam: For those with presumptive business income — side consulting, freelance work, small business — along with salary. Deadline: August 31, 2026.
Quick decision guide for most PSU employees:
Only salary income → ITR 1,
Salary plus MF redemptions or crypto → ITR 2
Salary plus F&O trading → ITR 3
Salary plus side business or consulting → ITR 4
One final rule: filing a more detailed form than required is never penalised. Filing a simpler form than required always is. When in doubt, go one level up.
Documents You Need Before You Start
Before you open the ITR filing portal, gather everything first. Filing halfway and hunting for documents is how errors happen.
Here is the complete checklist:
Form 16 from your employer — your primary salary document. Don’t file without it.
Form 26AS — TDS credit statement. Download from the IT portal. Match every TDS entry against your records before filing.
AIS — Annual Information Statement — shows everything the IT Department knows about you. Download and review carefully.
Mutual Fund capital gains statement — if you redeemed, switched, or ran an STP during the year. Download from your AMC or CAMS/KFintech portal.
Options trading profit and loss statement — if you traded F&O during the year. Your broker provides this. Note: F&O income is treated as business income, which changes your ITR form from ITR 2 to ITR 3.
Crypto trading statement — if you bought or sold any cryptocurrency or digital assets. Export transaction history from every exchange you used. Crypto is taxed at a flat 30% and must be reported in Schedule VDA. The 1% TDS deducted by exchanges will show in your Form 26AS — claim it.
Bank interest certificates — savings account interest, FD interest if any.
Any deduction documents — if filing under old regime, all investment and insurance proofs.
One rule: if it generated income or a tax deduction during FY 2025-26, you need a document for it. The IT Department’s AIS already has most of this data. Your job is to make sure your ITR matches it exactly.
The Most Confusing Part — Filling the Salary Section
The salary section of the ITR form is where most PSU employees get confused. And the confusion starts before they even open the ITR form.
Here is why. Your salary figure appears in three different places — Form 16, Form 26AS, and AIS. Three documents, three numbers, sometimes three different amounts. Which one do you use?
Use Form 16 for your salary figures. Always. Form 16 is issued directly by your employer, contains the complete salary breakup, perquisites, deductions, and TDS — all verified and signed off by your accounts department. This is your primary salary document. Fill the salary section of your ITR from Form 16 Part B only.
Now the TDS mismatch problem. Sometimes the TDS shown in Form 16 doesn’t match what appears in Form 26AS or AIS. This is more common than you’d think — I have personally helped colleagues untangle this confusion every filing season. The reason is usually a data entry error by the employer’s accounts department when filing quarterly TDS returns, or a timing delay in deposit.
Here is the correct way to handle each document:
Use Form 26AS as your authoritative source for TDS credits — the tax already deposited against your PAN. This directly affects your final tax calculation and refund.
Use AIS as your authoritative source for income completeness — it shows every income source the IT Department knows about, including bank interest, MF redemptions, and crypto transactions. If something appears in AIS and not in your ITR, you will get a notice.
If Form 16 and Form 26AS don’t match — don’t file. Contact your HR or accounts department immediately. Ask them to verify and correct the TDS return. Filing with a mismatch is not a solution. It is a delayed problem.
Check AIS Before Submitting
AIS is the document most PSU employees don’t know exists — until they get a notice because of it.
AIS — Annual Information Statement — is available on the Income Tax portal under Services. It shows everything the IT Department already knows about you from all sources. Your employer’s data, your bank’s data, your mutual fund house’s data, your broker’s data, your car dealer’s data — all consolidated in one place under your PAN. Every single monetary transaction that happened under your PAN during the financial year gets assembled here automatically. Every year, the IT Department matches your filed ITR against your AIS. Any mismatch triggers a notice.
Three things consistently surprise PSU employees when they open their AIS for the first time.
First — mutual fund redemptions. Many employees invest in mutual funds for the long term and occasionally redeem units thinking it won’t affect their taxes much. What they miss: redeeming equity mutual fund units held for less than 12 months attracts Short Term Capital Gains tax at 20%. This redemption shows up clearly in AIS. If it’s not reported in the ITR, a notice follows. It doesn’t matter if the amount is small. If AIS shows it, your ITR must show it.
Second — stock day trading. Every buy and sell transaction in your demat account is visible in AIS. PSU employees who do occasional intraday trading often don’t realise that intraday stock trading is treated as speculative business income — not capital gains. It needs to be reported separately. Even if you made a loss, it must be reported. The IT Department can see every trade. Ignoring it is not an option.
Third — TCS on car purchase. If you bought a car with an ex-showroom price above ₹10 lakh, the dealer collected 1% TCS from you at the time of purchase and deposited it against your PAN. This appears in your Form 26AS and AIS. Most people pay it and forget it. What they don’t realise: this TCS is tax already paid on your behalf — like TDS. It can be claimed as a credit in your ITR, reducing your final tax liability or generating a refund. For a ₹15 lakh car, that’s ₹15,000 sitting with the government waiting to be claimed.
Check your AIS before filing. Every single entry. Anything that appears there and is missing from your ITR is a notice waiting to be issued.
New Regime vs Old Regime at ITR Filing
Most PSU employees don’t know this — you are not locked into the regime you chose with your employer at the beginning of the year.
When you selected your tax regime on the ESS portal in April, your employer used that choice to calculate TDS every month. But at the time of actual ITR filing, salaried employees without business income can switch regimes. If the other regime gives you a lower tax liability, you switch, file under that regime, and claim a refund for the excess TDS already deducted.
A colleague of mine did exactly this. He chose old regime at the start of the year, confident it would save him more. TDS was deducted at old regime rates all year. When he sat down to file, he ran the comparison — new regime came out cheaper. He switched at the filing stage, filed under new regime, and received a refund for the difference.
That refund was real money back in his account simply because he took ten minutes to compare both regimes before hitting submit.
Here is the practical step: before you finalise your ITR, toggle between both regimes on the filing portal. The portal calculates your tax liability under both automatically. Whichever shows lower tax — file under that. Don’t assume the choice you made in April is the right one for filing in July. Your actual salary, actual deductions, and actual perquisite values are all now on the table. Run the comparison fresh.
One important note: this switching flexibility applies to salaried employees only. If you have business income — F&O trading, freelance work, consulting — different rules apply and switching has restrictions. For pure salaried PSU employees, the flexibility is available every year.
Step by Step Filing Process
Filing your ITR is simpler than most people think. Here is the exact process, step by step.
Step 1 — Go to the portal. Open incometax efilling portal. This is the official Income Tax e-filing portal. Don’t use any third party website if you’re comfortable filing yourself.
Step 2 — Login or register. Login with your PAN as user ID. First time users need to register with PAN, Aadhaar, and mobile number. Complete Aadhaar OTP verification during registration.
Step 3 — Go to File Income Tax Return. From the dashboard, go to e-File → Income Tax Returns → File Income Tax Return. Select Assessment Year 2026-27 for FY 2025-26 income. Select online filing mode.
Step 4 — Select your ITR form. Choose from the dropdown — ITR 1, 2, 3, or 4 based on your income sources as discussed earlier. The portal may suggest a form automatically based on your AIS data. Verify it is correct before proceeding.
Step 5 — Fill each section carefully. The portal pre-fills data from Form 26AS and AIS automatically. Do not blindly accept pre-filled data. Cross check every figure against your Form 16. Salary figures, TDS amounts, perquisites — verify everything. Add any income not pre-filled — bank interest, capital gains, crypto gains.
Step 6 — Validate each section. After filling every section, click Validate. The portal will flag any errors or missing information. Fix every error before moving forward. Do not skip validation.
Step 7 — Check tax payable or refundable. After validation, the portal shows your final tax position — tax payable or refund due. If tax is payable, pay it through the portal before submitting. If refund is due, verify your pre-validated bank account details are correct. Refunds go directly to your bank account after processing.
Step 8 — Submit. Once satisfied, hit Submit.
Step 9 — E-verify within 30 days. Submission is not complete without e-verification. E-verify immediately using Aadhaar OTP — it takes 30 seconds. Don’t wait. An unverified ITR is treated as not filed by the IT Department.
Done. Your ITR is filed.
Common Mistakes PSU Employees Make
After years of helping colleagues file their ITR every season, these are the mistakes I see repeated without fail.
Wrong ITR form. The most common and most consequential error. Salary plus Mutual Fund redemption filed in ITR 1. F&O trading not reported at all. Crypto gains ignored entirely. Wrong form means defective return, which means notice, which means unnecessary stress. Refer to the ITR form selection section above.
Not cross checking Form 26AS before filing. TDS deducted from your salary must appear correctly in Form 26AS against your PAN. I have helped multiple colleagues discover that TDS deducted from their salary was deposited against a wrong PAN by the employer’s accounts department. This happens more than you’d think — especially when two employees share a similar name. TDS meant for Pulak ends up credited to another Pulak in the same organisation.
Your tax credit disappears. You end up paying tax that was already deducted. Always cross check Form 26AS line by line before filing. If there is a mismatch, raise it with HR immediately and get it corrected before the deadline.
Not reporting MF redemptions. Employees redeem mutual fund units and assume it has no tax impact. It does. Short term redemptions attract 20% STCG. It shows in AIS. Report it.
Missing TCS on car purchase. Bought a car above ₹10 lakh? The dealer collected 1% TCS. It’s sitting with the government under your PAN. Claim it in your ITR. Don’t leave it behind.
Ignoring intraday stock trading. Every trade is visible in AIS. Intraday trading is speculative business income — not capital gains. Report it correctly or expect a notice.
Not e-verifying after submission. Filing without e-verification is the same as not filing. The IT Department does not consider your return filed until e-verification is complete. Do it immediately after submission using Aadhaar OTP. Don’t wait 30 days and forget.
Filing before Form 16 arrives. Impatient filers use salary slip figures instead of Form 16. Salary slip net pay is never the correct figure for ITR. Wait for Form 16. Always.