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What is Form 16?

Form 16 is a document or certificate, issued as per Section 203 of the Income-Tax Act 1961, to salaried professionals in India by their respective employers.

It contains details regarding the salary paid by the employer to the employee in a financial year and the income tax that has been deducted from the salary of the individual by the payer.

The TDS, so deducted, by the employer is deposited with the Income Tax department and Form 16 in turn is proof of the same. Employers need to issue Form 16 to their employees on or before 15th June of the financial year immediately following the financial year in which the income was paid and tax deducted.

Eligibility criteria for Form 16?

Every salaried individual who falls under the taxable bracket is eligible for Form 16. If an employee does not fall within the tax brackets set, he/she will not need to have Tax Deducted at Source (TDS)

What is Form 16

Components of Form 16

Form 16 is sub-divided into the following two parts which include:

  • Form 16 Part A and
  • Form 16 Part B

Form 16 Part A

Part A gives the summary of tax collected by the employer from the salary income, on the employee's behalf, and deposited in the government's account. It is a certification duly signed by the employer that they have deducted the TDS from the employee's salary and deposited it with the income tax department. This part is generated and downloaded through the Traces portal of the Income Tax department.

 

Form 16 Part A

It contains the following details:

  • Personal information of the employer as well as the employee. Particulars such as the individual and employer's name, address details, PAN details of both, and employer's TAN details.
  • The Assessment Year (AY)
  • The time period for which the individual was employed with the employer in the concerned Financial Year
  • Summary of the salary paid
  • Date of tax deduction from the salary
  • Date of tax deposit in the account of government
  • Summary of tax deducted & deposited quarterly with the Income Tax Department
  • Acknowledgment Number of the TDS Payment
 

Form 16 Part B

Part B is a consolidated statement covering details regarding salary paid, any other income as disclosed by the employee to his/her organization, amount of tax paid, and tax due if any. Part B of Form 16 is an annexure to Part A. It represents the information along with the exemptions and deductions applicable thereon. Employee details such as name and PAN are mentioned even in Part B.

Form 16 Part B

Form 16 Part A

It contains the following information:

  • Total Salary Received
  • Exemptions Allowed U/s 10(5) 10(10) 10(10A) 10(10AA) 10(13A), amount of any other exemption u/s 10.
  • Standard deduction allowed under section 16 of the Income Tax Act.
  • Income (or admissible loss) from house property reported by employee offered for TDS, Income under the head Other Sources offered for TDS. A field for reporting the total amount of salary received from other employers is present.
  • Deductions from Salary: Section 80 C / 80 CCC / 80 CCD/80D/80E/80G/80TTA and other applicable sections are provided. The details for all these deductions need to be submitted by the employee along with the necessary supporting documents to the employer.
  • Net Taxable Salary.
  • Education Cess and surcharges if any.
  • Rebate under Section 87, if applicable.
  • Relief under Section 89, if any
  • Total amount of tax payable on income.
  • Tax deducted and the balance tax due or refund applicable.

Downloading of Form 16

Form 16 can only be downloaded and issued by your employer. Any individual cannot download his / her Form 16.

Multiple employers in a financial year

In the case of people who have changed jobs and hence worked with multiple employers in a particular financial year, they will receive individual Form 16 from all the employers.

Form 16 for previous years

In the event, that an individual misplaces his/her earlier Form 16, they can reach out to the concerned employer, who will issue them a duplicate copy of the same.

Is Form 16 and Form 16A similar?

Many people use these terms interchangeably, but in reality, these are two different documents. The objective of Form 16 and Form 16A is the same as they are both TDS certificates but the difference lies in the issuing body.

While Form 16 shows the tax deducted at source (TDS) for a salaried employee, Form 16A is applicable for a non-salaried employee.

People rendering their services to an organization not as an employee, but as a consultant and earning contractual/professional and other fees for their services, are eligible to receive Form 16A. Also, there are many other areas where TDS can be applicable like the tax for interest earned on your Fixed Deposit, etc. Here the bank is the organization that deducts the tax at source. Hence, for every financial year, they must issue a TDS certificate called Form 16A to the customer.

Linkage between Form 16 and Form 26AS?

Form 26AS will combine all the tax deducted from your salary and/or non-salary income and deposit with the authorities concerned. So, tax deductions that are shown in Form 16 / Form 16 A can be cross-checked and verified using Form 26AS. Ideally, the TDS amounts reflected in Form 26AS and Form 16/16A should always match. If there are discrepancies, the Income Tax Department considers the TDS figures as per the Form 26AS only.


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Category Income Tax, Other Articles by - CA Sapna Ghelani 



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