Form 16 is a certificate under the Income Tax Act that contains vital information required to file income tax returns. An organization’s employer issues it for each assessment year on or before June 15th of the next year. This certificate is issued based on Section 203 of the Income Tax Act, 1961.
Form 16, also known as a deduction certificate, can be obtained by filing the TDS online. It comprises the details related to the salary paid by an employer to an employee in a given financial year. It also has the details of the income tax that has been deducted from the individual’s salary and the claims under TDS.
Consider this:
The income from your salary for the current financial year is more than the basic exemption limit of ₹2,50,000. In such a case, your employer is required to deduct TDS with the help of the TDS claim forms on the salary and deposit it with the Indian government.
However, the income from sources apart from the salary fall under 16A Form. Also, if you have worked with more than a single employer or have changed jobs in a financial year, you will receive individual Form 16 from all employers.
Steps to Download Form 16
The process to download Form 16 is limited to employers. It is a popular belief that salaried individuals cannot download their form using their PAN at the TRACES website, which is contradictory. All employers must issue this form every financial year to eligible employees before May 31st. If you do not know about the downloading process for Form 16, fret not because the process is a simple-to-follow method that includes easy steps. This simple four to five-step process requires you to:
- Visit the TRACES portal.
- Log in on the portal with your login ID and password.
- Visit the Downloads tab, and you can find Form 16 A here.
- Open the form and fill in all the required details correctly.
Components of Form 16
Form 16 is divided into two distinct parts – A and part B.
16A Form offers a record of the tax collected by the individual’s employer or organization that offers them their salary income. It is deposited into the government’s account. It is more like a TDS online certificate signed by the employers stating that they have deducted TDS from an employee’s salary and have deposited the same with the IT department.
- Invest in ELSS funds
- The employer and employee’s details include their name, address, PAN, and TAN details.
- The Assessment Year indicates the financial year in which the income is assessed.
- The employment period for which the employee was employed with an employer in a particular financial year.
- Summary of salary credited.
- Sum of deducted and deposited tax amount with the IT department.
- Date of tax deduction and deposited.
- Bank’s BSR code.
- Challan number.
- Acknowledgement number of the TDS that is paid.
The components mentioned above form primary elements of part A of Form 16 that help taxpayers take care of the claims under TDS.
- Part B
Form 16B is also a TDS certificate issued by a purchaser or deductor to a seller. It enables taxpayers to identify the overall tax deducted at the source (TDS) when they buy a home/property. The deductor deposits this tax amount with the Income Tax Department of the Government of India. In simpler terms, Form 16B is that certificate that shows the entire TDS deducted during the event of a property sale. TDS on immovable property, for instance, is governed by the Income Tax Act’s Section 194-IA. However, agricultural and immovable properties with a sale value of less than ₹50 Lakh are exempt from TDS.
These government provisions, along with many others, are strategically devised to make financial and tax planning easier and beneficial for all citizens of the nation. Making the proper use of these provisions not only helps you contribute towards stabilizing the country’s economy but also empowers you to save and invest your hard-earned money judiciously. Therefore, fill the TDS claim forms correctly and reap the correct deductions and gains under the Income Tax Act.
