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Frequently asked questions, related to Form 16

What is Form 16?

  • Form 16 is an Income Tax form issued under section 203 of the IT Act for Tax Deducted at Source from an employee’s salary. Form 16 contains a detailed record of every tax deducted from the salary of the employee by the employer.

  • Form 16 contains all details about salary paid by the employer, it contains salary structure, salary breakdown and the tax deducted from the employee’s salary. That’s why it is also called the Salary Certificate.

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Where can I get a Form 16?

An employer must issue Form 16 to the employees even if there is no tax deduction from the employee’s salary as Form 16 carries all the information required by an employee and necessary to file his/ her income tax returns.

How can I use Form 16 to file Income Tax Returns?

In India, the rule for filing Income Tax is based on The Income Tax Act of 1961 and the Income Tax rules of 1962. Form 16 is issued to verify that the employee’s Income Tax has indeed been paid. This is the reason why every employer must issue this Form 16 to their employees if they exceed certain minimum floor limits.

Why is Income Tax Form 16 required?

When a salaried individual realizes the contents of Form 16 then Income Tax Returns filing become more understandable. With a thorough knowledge of the form 16, an employee will be able to easily file the Income Tax Return on his/ her own. Understanding Form 16 is also very important if an individual’s only source of income is from salary.

Form 16 has two section, Part A and Part B.

Part A of Form 16 consists of the following:

  • The employee’s name.

  • Address of residence of the employee.

  • The employer’s name and address.

  • Permanent Account Number (PAN) of both the employer and the employee.

  • Tax Deduction Account Number (TAN) of the employer.

  • Details of the Assessment Year (the year when the tax liability is calculated upon the income earned the previous year). Example; the Assessment Years for income earned between 1 April 2015 and 31 March 2016, will be 2016-17.

  • Details of the employee’s date of joining the company.

  • A summary of the Tax Deducted at Source (TDS) which is paid on behalf of the employee by the employer.

Part B comprises of numerous details that are needed while Income Tax Returns.

Part B of Form 16 consists of the following:

  • The amount of salary.

  • The amount of any other income which may be taxable.

  • Details of tax deductions.

  • Details of Gross Income

  • Any deductions made under sections 80C, 80CCC and 80CCD (always note that the aggregate amount deductible under these three sections should never exceed Rupees 1 lac).

  • Any deductions under section 80D (health insurance premium), 80E (interest on education loan), 80G (charity donation) etc.

These details are very helpful in assisting the Income Tax Department to maintain a track of the money flow of the employee and the employer.

How to fill Form 16?

Steps to fill Form 16

Part A of Form 16 should be filled with the following details:

  • Fill in the name and address of the employer.

  • Name and designation of the employee as recorded in the company.

  • Permanent Account Number of the employer.

  • Tax deduction and account number where the deducted amount is saved.

  • The employee’s Permanent Account Number.

  • In the CIT (TDS) section enter the office details of Income Tax Commissioner.

  • Enter the Assessment Year and Period.

  • Mention the taxes deducted in every quarter.

Part B of Form 16 should be filled with the following details:

  • Enter the Gross salary (the total salary before any deductions added with prerequisites)

  • Mention the allowance paid by the employer (travel allowances, house rent allowances etc.)

  • Mention the total income of the salary and the payable tax amount.

Why should I fill Form 16?

Form 16 is required after an individual files his/ her Income Tax Returns and after the employer files the Taxes Deducted at Source (TDS) on behalf of the employee. Many institutions like banks and financers use this document during verification process if an individual applies for a home loan, car loan, personal loan etc.

FORM 16A

Form 16A is also known as the TDS certificate, as it is issued to a deductee by the official TRACES website, it can also be issued to the deductee by a bank after deducting TDS on the income from interest.

TDS form 16A is applicable for the income that is earned from various sources, other than salary.

Details that are mentioned in Form 16A are similar to the details that are present in form 26AS. Income Tax Form 16A, is issued quarterly, whereas Income Tax Form 16 is issued annually.

You can check the status of your TDS certificate Form 16 and Form 16A, by visiting the official Income Tax e-filing website. Your Form 16A must contain the Traces logo and name along with the certificate number. If you find a Form 16A without these details, you must understand that it can be a system generated, invalid TDS Form 16A.

Frequently Asked Questions

Q. What are the ways to obtain Form 16?
Form 16 is usually issued by an employer and it is applicable for the present financial where the total earnings and taxes deducted for that financial year is reflected.
Q. How can one gain access of Form 16 for the Previous Years?
If a taxpayer requires Form 16 from any of the previous years, he / she can request for it to be issued, from the employer.
Q. Is it mandatory for an employer to issue Form 16?
As per the provision of Income Tax Act, it is mandatory for an employer to issue Form 16 to the employee if any TDS has been debited from the salary of the employee.
Q. Why is Form 16 required?
Form 16 is required because of its beneficial function in Income Tax filing process. Form 16 contains a complete record of the salary income earned and the taxes paid on it.
Q. What are the other benefits of Form 16?
Form 16 can be used as a proof certificate to verify whether the taxpayer has paid the correct tax amount. It allows the government to check if a taxpayer is truthfully making contributions towards his / her tax liabilities.
Q. What is a Digitally Signed Form 16?
Form 16 is issued by the employer either in hard copy or soft copy. To speed up the filing process, the government has introduced Digitally Signed Form 16 which can be downloaded and used while e-filing for Income Tax Returns.
Q. Generally when does an employee receive Form 16?
The employers usually issue Form 16 by the 31st of May, each year. However, the date may vary from one company to another.
Q. What can be done if the employer does not issue Form 16?
When an employer fails to issue Form 16 then the taxpayer can refer to his / her Form 26AS online. Form 26AS will contain every detail of taxes which have been debited from the taxpayer’s account and credited to the government’s account.
Q. State the difference between Form 16 and Form 16A.
Although Form 16 and Form 16A are both TDS Certificates, the differences lie their applicability. Form 16 is used only while TDS has been debited from the salary, while Form 16A can be used for TDS on any Income taxation and not just the salary deduction. After the deduction of TDS, Form 16 gets issued by the employer but, Form 16A is issued by the bank after it has deducted TDS on the income earned from interest.