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Form 16 is a form issued by Employers for their employees as per the regulations under section 203 of the Income Tax (IT) Act, 1961. Form 16 is also known as the salary certificate. It includes all the information about your salary during the financial year. It also mentions the details of the tax deducted at source (TDS).
As issued by your employer, it summarizes the tax deducted by your employer from your annual salary. This TDS is calculated based on the income tax slab applicable during a particular financial year. The TDS is deducted on your behalf and it is your employer’s responsibility to deposit this amount with the government authorities. It certifies the TDS and confirms that the same is deposited with the concerned authorities.
Form 16 primarily serves as evidence of timely tax payments. Additionally, it confirms the validity of an employee’s income that has been registered and validated with the Indian government. Individuals who earn a salary of ₹2.5 lakh or less in a fiscal year (FY) are free from paying income tax. Anyone making more money is required to pay taxes and qualifies for Form 16.
Form 16 is an important form to have if you are a salaried individual. Here are the components of this form:
a. Refunds or balance of taxes payable to or by the employee
b. Employer details: TAN, PAN, tax slips and so on
c. Tax payment information: Challan number, DD number etc.
d. Employee details like PAN
e. Tax deduction under section 191A
f. Salary and TDS details
e. Employer’s declaration of tax payment
The Section 203 of the Income Tax Act of 1961 authorises the issuance of Form 16 as a certificate for tax deducted at source (TDS) from salary income received during the fiscal year. It is given by the employer in exchange for the tax withheld from an employee’s pay. The government receives the tax deduction and holds it against the employee’s PAN.
The TDS certificate gives a thorough breakdown of the employee’s wage payment and the tax withheld from it. Furthermore, Form 16 will reflect this information if an employee chooses the old income tax regime and produces investment documents. Form 16 is divided into Form 16 A and Form 16 B.
The part A may be generated on the TRACES portal of the IT Department. It includes details of the paying bank’s Basic Statistical Returns (BSR) code and challan numbers for future reference. Every page of this form is digitally signed by the deductor.
Form 16B attests to the fact that tax has been withheld at the source from income derived from the sale of immovable property—other than agricultural land—including buildings or portions of them. The property buyer has already deposited the TDS with the income tax division.
Therefore, Form 16 and Form 16A are not exactly the same. The latter is a part of the former. Every salaried individual is eligible for Form 16. However, if you do not fall under the taxable income bracket, the employer is not obliged to issue Form 16.
Certificates of tax deducted at source from your income from various sources are shown on Form 16 and Form 16A.
The TDS certificate or Form 16 is the most frequent financial document all working employees encounter when filing their income tax returns.
It is a certificate proving that tax was correctly withheld at the source from your wage and deposited in the government coffers.
Employees who get an annual salary of fewer than ₹2.5 lakh are free from income tax and do not receive a Form 16.
If a worker has many employers or changes employment within a fiscal year. If the employee’s salary exceeds the limit of ₹2.5 lakh, they will receive a separate Form 16 from each employer.
A person may receive income from sources other than their pay, such as the interest earned on fixed-deposit assets, mutual funds, gold bonds, and further capital gains.
The returns are subject to income tax at a varying rate set by the government. Financial institutions must issue you the Form 16A TDS certificate because they are required to withhold tax at the source in this situation.
Anyone paying monthly rent for a building or piece of land of Rs. 50,000 or more is obligated to withhold tax at the source and deposit it into the central bank account. After that, the tenant must provide Form 16A to the property’s owner.
The employer of anyone receiving a commission for the sale of insurance products is likewise responsible for TDS and must provide the agent with Form 16A.
Form 16 comprises of multiple details including the following:
Information about each deduction allowed under Chapter VI-A of the 1961 Income Tax Act covers all deductions made according to Sections 80C, 80CCC, 80CCD 1 and 2, 80CCD 2 and 1, 80D, and 80E.
To file your ITR by filling Form 16, the following information is required:
It is noteworthy that even if your employer fails to withhold income tax at source or fails to provide Form 16, you are still required to file your income tax return. If you have worked for many companies over a fiscal year, requesting Form 16 from each company on time can be quite helpful.
It is necessary for earning individuals to complete Form 16. As a working professional, your employer must have requested you to disclose your investments and other sources of income. You must provide the relevant information to ensure that your Form 16 is pre-filled. For this, you should check and confirm those details while filling out your TDS claims.
The following information must be completed to obtain the certificate for salaried workers:
The TDS claims process is straightforward if these fields are accurately filled out.
Anybody can generate and download Form 16 online for payments other than salary. So, having understood everything about Form 16, here is how to download it. First, you need to visit the Income Tax Department website. Then, under the ‘Forms/Download’ section, click on the ‘Income Tax Forms’ option. The following webpage will find two options under Form 16: PDF or fillable form. Select the appropriate option to avail yourself of the form.
Employers are the only ones who can use the Form 16 download process. Contrary to this widespread belief, salaried individuals can download their form from the TRACES website using their PAN. Before May 31st of each fiscal year, all companies must provide eligible employees with this form.
To get Form 16 from TRACES, a user needs to follow the following steps:
Salaried employees earning taxable income are eligible for Form 16 if their employers deduct tax at source on their salary. If the annual income is lower than the minimum tax slab, tax deducted at source (TDS) is not applicable.
Employers must provide Form 16 to the employees whose salary is subject to TDS. Form 16 lists earnings and taxes deducted in a financial year. It is essential for filing tax returns. The document also acts as an income proof needed for loan applications and visa processing.
Your employer can download the document from the TRACES website. You cannot download it yourself using your PAN.
Form 16 for salaried employees contains two parts, Part A and Part B.
Part A is a duly signed certification from your employer that they have deposited to the tax department on your behalf the tax you are liable to pay for your salary income.
It consists of:
Form 16 for salary employees provides information about salary breakup, other income the employee reported to the employer, applicable tax, tax exemptions, and deductions.
It contains the following information:
Other than Form 16 for salary earned, you can receive Form 16A and Form 16B for your other incomes. Form 16A records TDS deducted on incomes such as:
Form 16B certifies the TDS on revenues from a property sale, deducted by the buyer from the property price.
Employers can download Form 16 from the TRACES website https://www.tdscpc.gov.in/app/login.xhtml. They need their registered user id and password to log in and find the form under the ‘Downloads’ tab.
If you have changed jobs during the financial year, you will get an individual Form 16 from each employer.
After you receive your Form 16, you must check if all the details furnished are correct, including:
● Your name, address ● PAN ● Income details ● Deductions and exemptions availed ● Tax deducted ● Tax due
If you need an earlier Form 16, you can request your employer to issue a duplicate.
Form 16 furnishes TDS details on salary income. Form 16A is a TDS certificate for tax deducted on income other than salary.