In this article, we will discuss Form 16 which is essentially a certificate issued by employers to their employees. It provides a validation that TDS has been deducted and deposited with the government authorities on behalf of the employee. It gives a detailed summary of the salary paid to the employee and the TDS amount deducted on the same.
Form 16/ 16A is the certificate of deduction of tax at source and issued on deduction of tax by the employer on behalf of the employees. These certificates provide details of TDS / TCS for various transactions between deductor and deductee. It is mandatory to issue these certificates to Tax Payers.
Types of Form 16
The two types of Form-16 are:
- Form 16-A: This form gives a summary of the tax collected by the employer or organisation from the salary of the employee and deposited with the IT Department. This form is on behalf of the employee.
- Form 16-B: Part-B serves as a consolidated statement which includes details such as salary paid, deductions (if any), and any other income disclosed by the employee or employer.
Different Parts of Form 16
The two different Parts of Form 16 are mentioned below:
- Part A
- Part B
Before the certificate can be provided, authentication must be provided by the employer. In case you move to a new job, the new employer must provide a Form 16 as well. Each new employer must provide Form 16. The main components of Part A are mentioned below:
- Employer’s name and address
- Employer’s PAN and TAN
- Employee’s PAN
- Details of the tax deducted and deposited on a quarterly basis
An annexure to the first part of Form 16, Part B has the below-mentioned components:
- Salary breakup (detailed)
- Breakup of the allowances under Section 10 of the Income Tax Act in detail
- Deductions allowed under Chapter VI A of the Income Tax Act
- Any relief under Section 89 of the Income Tax Ac
Who are Eligible for Form 16?
Any individual who is earning a salary and must file tax returns are eligible for Form 16. In case individuals need not file tax returns, it is not mandatory for them to submit Form 16. However, employers issue the certificate so that a track of their earnings can be maintained.
How to Download Form 16?
The procedure to download Form 16 from the official Income Tax Department website is mentioned below:
- Visit the official website of the Income Tax Department (https://www.incometaxindia.gov.in/Pages/default.aspx).
- Under the ‘Forms/Download’ section, you will find the ‘Income Tax Forms’ option, click on it.
- Next, you will find the ‘PDF’ and ‘Fillable Form’ options available under ‘Form 16’.
- Click on the relevant option.
- You will be able to download the form on the next page.
How to File ITR with Form 16?
There are certain bits of information that are required when filing your ITR. These details can be found in Form 16. They include the following:
- Allowances that are exempt under Section 10 of the Income Tax Act
- Taxable salary
- A breakup of the deductions under Section 16 of the Income Tax Act
- Income from house property provided for TDS
- Income from other sources provided for TDS
- A breakup of the deductions under Chapter VI-A of the Income Tax Act covering the deductions under Section 80C, Section 80CCC, Section 80CCD(1), Section 80CCD(1B), Section 80CCD(2), Section 80D and Section 80E of the Income Tax Act
- Aggregate of deductible amount under Chapter VI-A of the Income Tax Act covering the deductions under Section 10(a), Section 10(b), Section 10(c), Section 10(d), Section 10(e), Section 10(f), Section 10(g), Section 10(h), Section 10(i), Section 10(j), and Section 10(l) of the Income Tax Act
- Refund due or net tax payable
Additional details from Form 16 required for filing your income tax returns
- Tax deducted at source by the employer
- Employer’s TAN
- Employer’s PAN
- Employer’s name as well as address
- Present assessment year
- Name and address of the taxpayer
- PAN of the taxpayer
*There are certain fields in the form that are notified for deductions. They are as follows: :
- Deduction for life insurance premium paid, contribution to PPF etc., under Section 80C
- Deduction for contribution to pension funds under Section 80CCC
- Deduction for employee’s contribution to a pension scheme under Section 80CCD(1)
- Deduction for taxpayer’s self contribution to a notified pension scheme under Section 80CCD(1B)
- Deduction for employer’s contribution to a pension scheme under Section 80CCD(2)
- Deduction for health insurance premium paid under Section 80D
- Deduction for interest paid on loan taken for higher education under Section 80E
- Deduction for donations made under Section 80G
- Deduction for interest income on savings account under Section 80TTA
Why Form 16 is needed?
Form 16 can be a crucial document for the following reasons:
- It works as a proof that your employer has deducted tax from your salary and deposited it with the government
- It helps in the income tax returns efilling process
- It is usually requested by banks and financial institutions when you approach them for loans
What are the benefits of Form 16?
Some of the benefits of Form 16 are as follows:
- It acts as the ‘income from salary’ statement of the individual.
- It helps at the time of filing of income tax returns.
- It is a supporting document for the issuance of visa.
- It acts as a proof of income.
- It helps keep a tab on all your tax-saving investments.
- It provides a clear picture of the computation, payment, and refund of your taxes
Difference between Form 16, Form 16A, and Form 16B
The difference between Form 16, Form 16A, and Form 16B has been summarised in the following table:
|Form 16||Form 16A||Form 16B|
|1) Issued by the employer who deducts the TDS.||1) Issued by the financial institution that deducts the TDS.||1) Issued by the respective buyer to the seller for the deduction of TDS for the sale of immovable property.|
|2) Issued for tax deducted at source on salary.||2) Issued for tax deducted at source for any other income except for salary.||3) Issued for tax deducted at source for the sale of immovable property.|
All about Form 16 – FAQs
- What is Form 16?
Form 16 is the final certificate issued by your employer giving details of the salary you have earned and the tax deducted on your behalf and paid to the government. For example, if a TDS of Rs 4505 and a health and education cess of Rs 72 are deducted from your April salary, Form 16 details the same. Your employer should hand it over to you by 15th June
- What is Form 16A and how is it different from Form 16?
If you are not a salaried employee and work as a professional for an organization and earn contractual/ professional/ other fees based on services rendered and invoices raised, then you get Form 16 A that shows TDS details deducted from the payments made to you.
The difference between Form 16 and Form 16 A is that Form 16 shows TDS details for a salaried employee whereas Form 16 A shows the TDS details other than for a salaried employee. These FAQs on Form 16 resolve the doubts of individuals.
- How are these forms generated?
These forms shall be generated by TDS CPC on processing the quarterly TDS / TCS statements filed by the deductor. Deductor will have to raise a request for the same on TRACES. Deductor shall have the option to digitally sign the certificates
4. when are the due dates for the issuance of Form 16 and Form 16A certificates?
Form 16 is issued annually and is supposed to be issued by the 31st of May. On the other hand, Form 16A is issued quarterly and is issued within 15 days from the due date of furnishing the statement of tax deducted at source as per rule 31A.
5. can I get a duplicate Form 16 certificate if I misplace the original one?
Yes, you have to get in touch with your deductor to get the duplicate certificate issued
6. If I am a pensioner, who will issue my Form 16?
If you are a pensioner, the bank through which you are receiving your pension will issue Form 16. Your previous employer will not be issuing Form 16 in this case.
7. What is the password for opening the Form 16 / 16A text file?
The password for opening Form 16 / 16A will be your TAN in capital letters, i.e., AAAA11111A.