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Form 16 is a certificate for tax deducted at source (TDS) on a person’s income under the head ‘salary,’ which is given under section 203 of the Income Tax Act, 1961. It is given when an employer deducts tax from an employee’s salary and deposits it with the government. The document contains a full breakdown of the money paid or credited to the employee, as well as the applicable TDS. This form is usually issued after the end of the financial year for which it is issued, in compliance with the terms of the Income-tax Act (IT Act). If the employer has deducted the tax from the employee’s salary, the employer is required to issue the certificate to the taxpayer. Form 16 facilitates the submission of an ITR because it contains information about a person’s pay and tax exemptions that are conveniently accessible. The TDS certificate comprises of two parts, namely - Part A and Part B. It is important to note that both these parts should have the TRACES logo on them, as only then they will hold value.
The tax deducted at source on salary is detailed in Part A of Form 16. The employer creates it and downloads it from the TRACES site. It includes a summary of the amount paid or credited, the tax deducted at source, the PAN (Permanent Account Number) and TAN (Taxpayer Identification Number) of the employer, and the PAN of the employee.
Form 16B or Part B of Form 16 is actually an annexure to Part A, and the employer has to issue this part. Part B includes important information and details like the salary breakup (in detail), income tax exemptions under section 10 of the Income Tax Act of 1961, deductions as per chapter VI-A of the IT Act such as Section 80C, Section 80D, and other relevant sections; the standard deduction given to salaried employees, and section 89 related relief.
In India, the filing of Form 16B TDS is compulsory, and failure to do so results in a penalty. For this, a penalty of Rs.100 is charged per day. It should be noted that the deductor must provide this document to the recipient within 15 days of the given deadline. This is in Form 26QB for the challan-cum statement.
Salaried people are taxed according to appropriate slabs under the Income Tax Act of 1961, and are expected to file tax returns by a certain date each year. Form 16 is one of the certificates issued by employers that includes information about what salaried employees must file in order to file and submit their income tax returns.
When filing their forms, taxpayers frequently mistake Form 16A and Form 16B. Despite the fact that they are all part of the same certificate, each form serves a different purpose. To greatly simplify the tax filing process, taxpayers must learn about their individual reasons so that the process gets more streamlined and smoother. It is important to know the details so that the formalities can be looked into, in the right manner.
Ref. No. KLI/22-23/E-BB/490
