The most crucial document that every paid person looks forward to is Form 16. The employer typically issues this document up until May 31 for the preceding fiscal year. Being an important document for filing returns for any salaried person
Form 16 is nothing more than a TDS Certificate that the company issues, summarizing the TDS deducted on the employee's wages and benefits for the year. If TDS was taken from the employee's salary, the company must issue it. It must be given no later than May 31 of the next fiscal year in which TDS is deducted.
Table of Contents
Understanding Form 16
Form 16 is divided into two parts which are part A and part B. Let’s understand these parts in detail.
Part A of Form 16
This part contains following details
- Name and address of the employer
- Name and address of the employee
- PAN of the deductor
- TAN of the deductor
- PAN of the employee
- Assessment Year
- Period for which the TDS certificate is issued
- Income Tax Circle / Ward/ Office for TDS as applicable to the employer’s TAN
- Unique serial number of TDS Certificate
- Summary of tax deducted and deposited along with amount deposited and respective receipt number of TDS returns.
Part B of Form 16
Part B of Form 16 is the most important part which will display each vital part of salary and perquisites and contains following details
- Gross Salary
- Exempt Allowances
- Income Chargeable under the Head Salaries
- Any other income reported by the employee (interest on housing loan is also considered here as negative income which will reduce the salary income)
- Gross Total Income
- Deductions under section chapter VI-A (section 80C, 80D etc.)
- Total Income
- Tax payable on total income
- Relief from tax payable (under section 89 etc.)
- TDS deducted
- Net Tax payable or refundable
What are the requirements for Form 16 eligibility?
Every salaried person whose income is within the tax bracket is qualified to submit Form 16 in accordance with the rules set forth by the Finance Ministry of the Indian Government.
Tax Deducted at Source (TDS) is not necessary if an employee's income is outside of the established tax rates. As a result, in these situations, the employer is not required to give the employee a Form 16.
Things to be noted
- The employer has the option to issue or not to issue Form 16 if no TDS is withheld.
- If TDS is withheld from pay income, Form 16 must be submitted, including the receipts for the TDS return that show the tax has been paid to the Central Government.
- Employers that fail to produce Form 16 even while TDS is being withheld are subject to fines for failing to provide TDS certificates.
- If an employee has changed employment more than once, there may be more than one Form16 for that individual. However, the ITR for such an individual should total the TDS from each Form16 and aggregate the income received under head wages from all TDS certificates.
- The employee cannot avoid submitting an ITR for the reason that he did not get Form 16 (even if TDS was deducted). Even if Form 16 is not issued, the employee must submit an ITR if his income exceeds the threshold.