An Assistant Section Officer in Delhi filed his return last July in about eleven minutes. Form 16 from the PAO, pre-filled data on the portal, tick, tick, submit.
Fourteen months later a notice arrived. He had contributed ₹6.8 lakh to GPF that year — voluntary extra contributions, because the interest rate is good and it felt like the safest place to park money. The interest on the amount above ₹5 lakh was taxable. It was not in his Form 16, because it is not salary. He had never declared it.
The tax was small. The interest and the correspondence were not.
This is the shape of the problem for Central Government employees. Filing is genuinely simple for most of us — but the handful of things that go wrong are the things generic tax guides never mention, because GPF, licence fees and DDOs do not exist outside government.
Here is what actually matters on a government pay slip.
The Deadlines You Care About
You are filing for FY 2025-26, which the department calls Assessment Year 2026-27.
| What | When |
|---|---|
| Filing due date (salaried, ITR-1/ITR-2) | 31 July 2026 |
| Belated return (with late fee) | 31 December 2026 |
| Revised return | 31 March 2027 |
Miss 31 July and a belated return costs ₹5,000 under Section 234F (₹1,000 if total income is under ₹5 lakh), plus interest under 234A on any unpaid tax. You also lose the right to carry forward certain losses.
The revised-return window is generous — until 31 March 2027 — so a genuine mistake found in September is fixable. That is not a reason to be careless, but it is a reason not to panic.
Which ITR Form Applies to You
Most Central Government employees file ITR-1 (Sahaj). You can use it if your total income is up to ₹50 lakh and comes from salary, one house property, and other sources such as interest.
You must move to ITR-2 if any of these apply:
- You have capital gains — sold shares, mutual funds, or property
- You own more than one house property
- Your total income exceeds ₹50 lakh
- You have foreign assets or foreign income
- You are a director in a company, or hold unlisted equity shares
- You have agricultural income above ₹5,000
The trap: redeeming equity mutual funds — even a small SIP redemption — creates capital gains and pushes you out of ITR-1. Filing ITR-1 when ITR-2 was required makes the return defective under Section 139(9), and you get 15 days to fix it after the notice arrives.
Form 16 Comes From Your DDO, Not an HR Portal
Your Form 16 is issued by your DDO (Drawing and Disbursing Officer) or PAO (Pay and Accounts Office), not by a company HR system. Two parts:
- Part A — TDS deducted and deposited, generated from TRACES
- Part B — the salary breakup, allowances, deductions and taxable income
Always reconcile Form 16 against your AIS and TIS on the e-filing portal before you file. The Annual Information Statement pulls from banks, mutual funds, registrars and the TDS system. Where they disagree, the mismatch is what triggers scrutiny.
Common government-specific mismatches:
- Arrears paid in the year show in Form 16 but the AIS timing can differ
- Interest on GPF above the threshold appears in neither — you must add it yourself
- Savings and FD interest is in AIS but almost never in Form 16
- A mid-year transfer between offices can produce two Form 16s. You must combine them. Filing on one alone under-reports your income, and because each DDO applied the basic exemption separately, you will usually owe more tax.
If Part A is wrong, your DDO must file a revised TDS return — you cannot fix it from your side.
80CCD(2): The Deduction That Survives the New Regime
This is the single most valuable line for a Central Government employee, and the most misunderstood.
Under 80CCD(2), the employer's contribution to your NPS Tier-I account is deductible — and unlike almost everything else, it is available under the new tax regime.
For FY 2025-26 the limit is 14% of basic pay + DA.
The stale fact to watch for: most articles still say "government employees get 14%, private sector gets 10%." Under the new regime that stopped being true from FY 2025-26 — it is now a uniform 14% for everyone. The 14-vs-10 split survives only under the old regime.
Why it matters so much: under the new regime, 80C is gone, HRA exemption is gone, LTC exemption is gone. 80CCD(2) is effectively the only large deduction left standing. On a basic + DA of ₹9 lakh, that is up to ₹1.26 lakh off your taxable income in the new regime.
Two things people get wrong:
- This is the employer's 14%, not your own 10%. Your own mandatory contribution goes under 80CCD(1), which is inside the ₹1.5 lakh 80C ceiling and not available in the new regime. If you are still weighing the pension schemes themselves, the NPS vs OPS comparison covers that separately.
- It must actually appear in Form 16. If your DDO has not reflected the government's NPS contribution, raise it before filing rather than claiming it unsupported.
GPF Interest Above ₹5 Lakh Is Taxable
The rule that caught the ASO at the top.
Since FY 2021-22, if your own GPF contribution in a financial year exceeds ₹5 lakh, the interest earned on the excess is taxable. This is Rule 9D of the Income Tax Rules.
Three things make it easy to miss:
- It is taxed as Income from Other Sources, not as salary
- It does not appear in your Form 16, because it is not salary
- Your GPF account is notionally split in two — a non-taxable portion up to ₹5 lakh a year plus its interest, and a taxable portion above it plus its interest
The ₹5 lakh threshold applies where the employer makes no contribution to the fund — which is the case for GPF. (The lower ₹2.5 lakh threshold is the EPF figure, where the employer does contribute. Generic articles routinely apply the wrong one to government employees.)
Who this hits: anyone making large voluntary GPF contributions. It is entirely possible to cross ₹5 lakh without noticing if you raised your subscription percentage to shelter income.
What to do: ask your DDO or AG office for the taxable-interest figure for the year and declare it under Income from Other Sources. It is a small tax on a good investment — not a reason to stop contributing, just a reason to report it.