Kotak Life
Close
Close

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Icon for Kotak Preferred e-Term Plan

    Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Kotak E-Invest Plan

    Kotak e-Invest is a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and needs - be it protection; investment; financial security for child or retirement planning.

  • Icon for Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and insurance cover against any eventuality.

  • Icon for Kotak Preferred e-Term Plan

    Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

  • Icon for Kotak Preferred e-Term Plan

    Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Back

Why is Form 16 Important?

Save Tax Now
  • 25th Jan 2022
  • 203

Why is Form 16 Important?

One of the most critical and impactful financial tasks that a salary-earning individual has to perform is income tax filing. Because this is a yearly practice, it is beneficial to have a working grasp of the forms, its rules and regulations, and different components. Form 16 is one of the most important forms without which the discussion about income tax filing remains incomplete.

Read on to know what this form is and what is the importance of Form 16.

Why is form 16 important

What is Form 16?

Form 16 is a deduction certificate of income tax at source, or what we commonly call Tax Deducted at Source (TDS). Provided when the employer deducts tax on behalf of the employees, this form includes details about TDS for various transactions involving the deductor and the deductee. As an employee, you can obtain your Form 16 as proof of tax deducted on your behalf by the organization or employer from your salary income and submitted with the Income Tax Department of the Government of India. Your employer’s duly confirmed certification confirms income tax has been deducted as TDS from your salary.

This form is issued annually, usually after the conclusion of the financial year for which it is issued, in compliance with the provisions of the Income Tax Act. If the employer has deducted the tax from the employee’s salary, the employer must issue the certificate to the taxpayer.

If one has to answer the question “what is Form 16,” the answer in simple terms would be: Form 16 is a deduction certificate that facilitates the submission of an ITR because it contains information about a person’s pay and tax exemptions that are conveniently accessible. It has two parts: Part A and Part B, which play an equally important role in making up this TDS certificate.

Why is Form 16 Important?

Having understood what Form 16 is, the next question that taxpayers commonly ask is, “Why is Form 16 required?”

Form 16 is mostly used as proof of timely payment of taxes. It also confirms the authenticity and validity of the employee’s earnings, which are reported to the Indian government. Individuals earning less than ₹2.5 lakhs in a financial year are excused from paying income tax. However, those who earn more than this amount are subject to taxation and may be eligible for Form 16.

This deduction certificate is a proof of income or “income from salary statement” that can be provided to various agencies upon request. It can:

  • Be used to file ITR
  • Help in computing your tax liabilities
  • Be a single document to check all tax-saving investments
  • Assist in loan assessment and approval
  • Help in issuing new credit card
  • Help in visa issuance
  • Assist employers in calculating tax liabilities and what previous employers have deducted when switching jobs.
  • Be used to check if taxes have been overpaid for refund calculations.

It’s important to remember that all paid employees are entitled to a Form 16 from their employers. If your company deducts TDS from your salary, they must present you with Form 16, a TDS certificate validates if the TDS has been deposited with the government. Agencies, clients, and other deductors who deduct your TDS are all subject to the same rules. Such entities should file Form 16 before the end of the fiscal year, on May 31. They could even provide it every quarter.

As a salaried worker, you must understand the importance of Form 16 and file your income tax returns on time to help you avoid repercussions and penalties. Consider the various options and factors related to the form and its filing process to ensure a smooth and hassle-free financial journey.

- A Consumer Education Initiative series by Kotak Life

Also read

  • Tax Planning and Tax Benefits of Life Insurance

    Tax planning with tax saving life insurance is the best way to save tax. Click here to know how to save income tax with life insurance and tax benefit...

    Read more
    • 15th Feb 2022
    • 396

    5 Unusual Investments You Didn't Know for Saving Taxes in India

    Tax planning is important, but so are tax-saving strategies so here is a list of 5 unusual investment options that can help you understand how to save...

    Read more
    • 25th Jan 2022
    • 365

    How to File Form 16 for Salaried Employees?

    For salaried employees, complete awareness about the rules and regulations pertaining to Form 16 is critical as this form acts as a certificate for th...

    Read more

Related Plans

  • Kotak Invest Maxima

    Kotak Invest Maxima

    Kotak Invest Maxima is an investment oriented unit-linked life insurance plan with maximum premium allocation and a Systematic Switching Strategy that...

    Know more
  • Kotak Complete Cover Group Plan

    Kotak Complete Cover Group Plan

    Kotak Complete Cover Group Plan is a non-participating single-premium plan that provides life cover to a group of borrowers of the credit /lending ins...

    Know more
  • Kotak Group Shield

    Kotak Group Shield

    Kotak Group Shield Plan covers your customers' loans and savings and protects the well-being of your customers and their family members in the event o...

    Know more
  • Kotak e-Term Plan

    Kotak e-Term Plan

    Get protected at less than Rs.19/day with Kotak e-Term Plan. Our term insurance plan combines best-in-class features & comprehensive coverage with...

    Know more