Pranab Banerjee
A Salaried Employee's Tax Proof Certificate Form 16
You must obtain your Form 16 from your employer if you are a salaried employee.
Here are the basics and how to file your income tax return.
If you've been an employee for a while, you know the dates and other documents associated with an income tax return. That is, it's Form 16, Section 80C benefits, and July 31st.
But if you started working recently, or say last year, this will be your first time filing your income tax return, and on occasion, you would probably get your tax return form 16 from your accounting department. So what's next? What do you do with your Form 16 and what exactly is a Form 16?
Let's demystify the details of Form 16 here
Simply put, this is a certificate issued by the Income Tax (I-T) Department as proof of withholding tax (TDS) attached to your salary under the heading ‘salary income'. It basically confirms the amount of tax paid by the employee on their income that the employer has withheld from the wages paid to the employee.
If you worked for multiple employers, get your Form 16 from all the organizations or employers you worked for during the fiscal year. Remember that it is mandatory for employers to issue a Form 16 to an employee when the employer withholds tax from the relevant employee's wages.
Form 16 is actually two parts. Part A contains details like the name and address of the employer, employer's permanent account number (PAN) and TAN, employee's PAN, details of any benefits paid during the year, and finally the tax amount of this withholding paid .deducted from the salary of the employee for the financial year.
Form 16 also has an attachment, which is issued by the employer. This is known as Part B of Form 16 and includes details of salary breakdown, income tax deductions, and exemptions allowed under Chapter VI-A of the Income Tax Act ie. Parts 80C, 80D, etc. all standard deductions otherwise available to the employee, and deductions under Section 89 of the Income Tax Act, 1961.
Now that you have your Form 16, you can compare the details of your income and the tax paid on your income.
When filing your income tax return, you must include the information about the income received as wages under the heading ‘income from wages' in your income tax return. Next, you need to include any other sources of income, including business or employment (if any), bank interest income, dividend income, mortgage income house, etc., under their heads, and then arrive at all income and total taxes due.
Any other home loan or medical or health insurance claims must also be itemized, if not listed on your Form 16, to arrive at the total tax payable.
Remember that an individual can claim tax relief of up to Rs 1.5 lakh under Section 80C which includes his investments in the Employees Provident Fund, Public Fund, life insurance premium, principal paid for amortization of loans of housing, investments in Equity-linked Savings Schemes (ELSS), National Savings Certificate (NSC), 5-year tax-saving fixed deposits, and so on.
Now that you have finally calculated your total income for the year and the total tax due on your income, you can claim a refund or pay additional tax as needed.
For example, if the tax deducted from your salary is Rs 10,000 for the year and your total liability is Rs 6,000, then you can claim a refund of Rs 4,000. The I-T department will give you a refund along with interest on the extra tax paid. However, if the total tax payable is Rs 12,000, you will have to pay an additional tax of Rs 2,000 along with the relevant penalty if you do not pay the withholding tax within the due dates as prescribed by the Income Tax Act, 1961.
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