My employer has shown a lower salary in Form 16 compared to the salary credited in my account. Upon checking, I discovered that this is the case for all employees in the organization. Is this a good practice?
When it comes to the employer's actions, let him do whatever he wants. You should be concerned with the salary you have in hand - is it as per your offer letter or not? That's it.
If he is showing a lower salary in Form No. 16, it's good for you. Whenever you switch jobs, don't show your Form 16.
Please note that payments under Section 10 of the Income Tax Act (such as Rented accommodation HRA/Conveyance, etc.) are not included in the total salary shown in Form 16. So please check.
As rightly mentioned by Gupta, few allowances are non-taxable which may not reflect in Form 16. There is a working for all Form 16 issued. You can claim it and discuss with accounts personnel or a Chartered Accountant to have clarity on the said subject.
You should ask your employer about the reason for the difference. In all probability, it will be due to the amounts that are exempted from tax as per law.
You should not always assume that the company is wrong or engaging in fraudulent activities. The employer has to comply with certain laws.
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