Under new Income Tax rules for the fiscal year 2027, Form 130 has replaced the long-standing Form 16, introducing a more comprehensive reporting structure. Parag Jain, tax head at 1 Finance, explained that while the core purpose remains the same—capturing salary and tax deducted at source (TDS)—Form 130 features a three-part layout, including an annexure that consolidates salary, exemptions, deductions, and final tax liability. This change aims to simplify the filing process by reducing manual calculations.

Salaried individuals will not see changes in their income or overall tax liabilities, but the presentation of information will differ. The new form will refer to a 'tax year' instead of an 'assessment year,' which may lead to confusion as both terms coexist during this transition. Taxpayers are advised to review Form 130 for accuracy, ensuring that salary details and deductions match their declarations throughout the year. Additionally, the new format allows employees to verify TDS rates, helping to identify any discrepancies in tax deductions.

The shift towards Form 130 reflects a broader move towards digitization in tax reporting, with enhanced data integration expected to flag discrepancies earlier in the filing process.