All You Need to Know about Form 16

Form 16, a certificate issued by the employer to the company’s employees, contains all the information that is needed to fill and file one’s income tax returns. The employee must ensure that he or she is in possession of this form as it is proof that the employer did indeed deduct the tax at source.

It is also used to determine how the tax was computed, the deductions allowed, the investment declarations of the employee etc.

Basics of Form 16

Form 16 is a certificate that is issued under Section 203 of the Income Tax Act by the employer indicating the amount of tax deducted at source while paying the salary of the employee. If the employee’s salary happens to be lesser than the tax exemption limit, then the employer will omit issuing Form 16.

Part A of Form 16

This part contains the basic details of the Employee and the Employer, such as the name of the employee, his or her address and PAN details as well as the name of the employer, the address and his or her PAN details. Additionally, it will contain the details of how much tax was deducted and the date that the said amount was deposited with the income tax authorities, along with the acknowledgement challan issued by the government.

Part B of Form 16

This part contains the details of how the assessee’s tax was calculated keeping in mind the investment declarations, the allowances that has been paid by the employer and other relevant details like deductions, cess amounts, rebates on tax etc.

Details Required to be Filled in the Form 16

• Allowances exempt under Section 10 such as House Rent Allowance, Death-cum-retirement gratuity, commuted value of pension etc.
• Breakup of deductions under Section 16 such as standard deductions, entertainment allowance, tax on employment etc.
• Taxable Salary
• Income/admissible loss from house property reported by employee offered for TDS
• Income under the head Other Sources offered for TDS
• Breakup of Section 80C deductions
• Aggregate of Section 80C deductions
•  Tax Payable or Refund Due

FAQs about Form 16

• When does a deductor issue Form 16?

Usually, the form is issued on or before May 31 of the assessment year to ensure that the employee has sufficient time to file his or her income tax returns with the department. If an employer delays fails to issue Form 16 by the specified date, then they are liable to pay a penalty of rupees hundred for every day that the default continues. The penalty, however, should not exceed the amount of tax deducted.

• Which is the period when Form 16 is issued?

The form is issued for the financial year that the salary is meant for. For example, if the income tax returns are being filed in the assessment year 2021-22, then the period for which the form is issued is 2020-21 (the period for which the salary was paid).

• How can I benefit from Form 16 and Form 16A?

The benefits of Form 16 are highlighted as follows –

• It can be used to filed Income Tax Returns accurately.
• It can be used by the assessee to claim refunds.
• It can be used as proof of income.
•  It helps the assessee use it for the purpose of loan assessment and approval.
•  It helps the assessee use it for the purpose of visa issuance.
• It helps the new employer to compute tax liabilities when the assessee has changed his or her job.

How to Get Form 16?

The employee must get the said form from the employer either in print or as a softcopy. The softcopy can be downloaded from the employer’s account in TRACES website.

•  Is the employer required to fill the form if there is no TDS?

It is not mandatory for the employer to issue a Form 16 in case there is no TDS.

Conclusion

The value of this document will be realised at the time of filing one’s ITR. Ensure that you receive the form on time and use the details mentioned therein to not only ascertain that your employer has deposited the TDS amount with the government but also as an income from salary statement proof.