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All About Form-16

July 3, 2018

Form 16 is the TDS certificate that an employer issues to you when TDS is deducting by them.

The Income Tax Act, 1961 contains the provisions for Tax Deduction at Source (TDS).

A Deductor is a person responsible for tax deduction at source on specified types of payments made by it.

The tax so deducted form has to be deposited in the Government account.

Deductor also has to report the tax deducted in a statement within the prescribed time.

It is mandatory to file an electronic TDS statement for the following categories of Deductors:

  • Offices of the Government
  • Companies
  • Persons require to get their accounts audit u/s 44AB of the Income Tax Act, 1961
  • Deductors reporting more than 20 deductee records for any quarter in the financial year

TRACES enables deductors/collectors to view the status of challans and TDS-TCS credit for a PAN.

They can also download Conso File, Form 16 / 16A and Justification Report after logging in to their account on TRACES

Meaning of Form 16

  • Form 16 is the TDS certificate that an employer issues to you when TDS is deducting by them.
  • When an employer deducts TDS on salaries, the income tax act requires that a certificate must be issued by the employer, where the details of tax deducted and deposited is certified.
  • Form 16 is a certificate issue each year by the employer as per section 203 of the Income tax act.
  • That provides details information about the tax amount that has been deducted by an employer.
  • Form 16 contains details of salary, other income, tax benefits available and availed by you in the last financial year.
  • It has detailed information about the manner of calculating income as per income tax laws and tax payable on it.

Components of Form 16

Components of form 16 help us to understand

  • Tax Paid
  • Tax refund expected
  • Better tax planning
  • Assist us in filing the tax return

Form 16 Comprises of two section

Part A-Certificate of TDS

Hence Form 16 becomes proof of the TDS deducted by the employer from the salary of the employee and paid to the government account.

It contains personal information like

  • Name and address of the employee
  • Name and address of the employer
  • Pan number of Both employer and employee
  • Tan number of all employer
  • Receipt number of TDS payment
  • Period of employment
  • Bank challan details

Form 16-Part A

Fundamentally, part A of form 16 provides the summary of tax deducted from your income and deposited to the government as per the monthly and quarterly TDS return filed by the employer.

All the information assists the income tax department to keep track of the money flow from own and as well as in the employer’s account.

In addition, It provides information like Assessment year i.e. in which tax liability compute for the income earned during the previous year.

For example, 2017-2018 assessment year here means tax calculated from the income 1st of April to 31st March.

It also provides the summary of TDS deducted by the employer from our salary every month as tax and credits the same to Income tax department on our behalf.

Another information in Part A is TAN of employer and total deducted both of the information to be correctly mentioned in the tax return so that if any tax credit can get that.

Part B

This part of form 16 provides major information that is requires to fill the income tax

It contains the following fields:

  • Amount of Gross Salary.
  • Exemptions and Allowances Considered.
  • Deduction - Entertainment Allowance and Tax on Employment.
  • Income is chargeable under the head Salary.
  • Any Other Income reported by the employee.
  • Gross Total Income.
  • Deductions under Chapter VI-A (80C, 80D, 80E etc.).
  • Total Income.
  • Tax on Total Income.
  • Education Cess.
  • Tax Payable.
  • Relief under section 89, if any.
  • Tax Payable.
  • Verification of the above-mentioned details by the employer.

Form 16-Part B

Importance of Form 16

  • Form 16 serves as a source document during filing of IT returns, as it comprises details about Income, deductions, Tax calculated and tax deducted as per IT rules.
  • Serves as an important document for claiming the credit of tax deducted by an employer.
  • It required to produce before the income tax authorities if the credit of TDS is not proper.
  • Acts as an income proof for applying for home loans etc. and it an important document for visa processing. It is an authenticated certificate for income proof.

When form 16 not required

  • It is not mandatory to issue form 16 to the employee if TDS not deducted.
  • If the organization does not possess TAN then they are not entitled to deduct TDS. In this situation, form16 is not mandatory.
  • For self-employed form 16 not required. In this situation, it is vital to submit the income tax return as income proof.

 Difference between Form 16 and Form 16A

  • Form 16 and Form 16A are both TDS Certificates, but the difference is that
  • Form 16 is only a Salary TDS Certificate. It is issuing by the employer after deducting TDS on your salary.
  • Form 16A is used for TDS on any Income. It is issuing by the bank after deducting TDS on the income earned from interest.

Reference Links: Guide Line 1   

reference Blog: TDS Return Form


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